Question

Critical Thinking:  Assume the BLS decided it was time for you to analyze a broader perspective of the economy.  Use the following information to answer the questions below.  Your assigned economy has a population of 202 million.  Within that population, there are 172 million adults and 30 million children under the age of 16.  Some of the adults are in prison (2 million) and some are serving full time in the military (5 million) and the rest are currently all capable of working.  

There are some people however that don’t want to work, 2 million people would rather be full time students and there are 10 million retirees, additionally there are some who have given up their job search after a recession as noted below that are not looking for work.

There are 125 million people working, all of those working would like full-time work, but only 105 million found full-time jobs, the rest of the workers are doing part-time jobs.

In a past recession, 16 million workers lost their jobs.  Half of those 16 million job losers are still actively trying to find a new job, the other half are not.

In addition to the job losers above, 1 million people are temporarily out of work while they are changing jobs, 4 million people are looking for a new job because their employers no longer demand their skills, 3 million people just graduated and are starting the hunt for their first job, 1 million people lost their job when the government raised minimum wage forcing them to look for work and another 1 million are now looking when their companies automated.  Finally, an incredible amount of rain has all but halted construction, and 2 million workers will have to find other work while the rainy conditions continue.  

Given this information, complete the chart on the following page.  (Hint, be very careful, I suggest you go through every line above slowly working on the classification, as early errors my hamper later answers too)  You may wish to show work in the space below. (6 points, break down in parenthesis for each part in chart below)

Eligible Population (0.25)
Labor Force (0.5)
LFPR (0.5)
Unemployment Rate (0.5)
If you only counted each type of unemployment separately what is the percent unemployment of the total labor force for each category (hint, they should sum to your total unemployment rate)
Frictional (0.5)
Structural (0.5)
Cyclical (0.5)
Seasonal (0.5)
Calculate Society’s NRU (0.25)
Assume this society had 8 million discouraged workers.  If they all started looking for a job, what would the new unemployment rate be then? (1)
If you were to count underemployed individuals as unemployed, what would be the unemployment rate?  (separate from the row above, i.e go back to original value…hint watch out for the trick) (1)

Answer 1

Eligible Population = eligible population refers to the population who all are interested in buying or can buy.and here they are asking about all the eligible who can work .

=172 millions adults = working eligible

Labor Force =total labour force is the sum total of all employed and unemployed who are looking for the work

=5 million military persons+ 125 million working + [28-8] million unemployed but seeking work

=150 million labour force

LFPR =labour force participating rate is calculated by dividng the actively parctipating labour force with the eligible population and mutliplying the result with 100.

=[150/172]*100= 88.24%

Unemployment Rate =it is a the portion of unemployed out of the total labour force.

=[20/150]*100=13.33%

If you only counted each type of unemployment separately what is the percent unemployment of the total labor force for each category (hint, they should sum to your total unemployment rate)

Frictional = this occurs when unemployed searching for new job and the one who are unemployed due to workers in transititon.

= [[ 1 milion because of transition + 3 million graduated and wanted to hunt ]/150 million]*100= 2.66%

Structural = It occurs when there is an oversupply of jobs and people are willing to work, but the people searching for work are not qualified for these jobs.

= [4/150]*100=2.66%

Cyclical =Cyclical unemployment is similar to structural unemployment in that the business cycle is highly dynamic too, and changes all the time.

= [16 million / 150 million]*100=10.66%

Seasonal =The seasonal unemployment is prevalent in those industries which are engaged in seasonal production activities.

= [2 million of construction who switcheing/ 150 million ]*100= 1.33%

Calculate Society’s NRU= Natural unemployment reflects the number of people that are unemployed due to the structure of the labor force, such as those replaced by technology or those who lack certain skills to gain employment.

= [1 million due to change in technology + 1 million due to change in government ]/150 million = 1.33%

Assume this society had 8 million discouraged workers.  If they all started looking for a job, what would the new unemployment rate be then?

= [28/150 ]*100=18.66%

If you were to count underemployed individuals as unemployed, what would be the unemployment rate.= [20+20]/150*100=26.66%