Question

An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 have one part-time job, 5 have two part-time jobs, 10 would like to work and are looking for jobs, 10 would like to work but are so discouraged they have given up looking, 10 are running their own businesses, 10 are retired, and 10 are small children.

1.Calculate the labor force and the labor-force participation rate.

2.   Calculate the number of unemployed and the unemployment rate.

3.   Calculate total employment in two ways: as measured by the household survey and as measured by the establishment survey.

Answer 1

Solution:-

a) Labor force and Labor force participation rate:

Labour force = Full time + part time + two part time + people looking for job + those who can work

Labour force = 25 + 20 + 5 + 10 + 10 = 70 people

Labor Participation rate = (Labor Force/Employable Population)*100

Working age or employable population = 100 - 10 - 10 = 80

Labor Participation rate = (70/80) *100

                                           =.875*100

                                           =87.5%

Therefore,Labor force is 70 people and Labor force participation rate is 87.5%

b)  Number of unemployed and the unemployment Rate

Unemployed are those who are not working but are actively looking for a job.

Unemployed = 10 People

Unemployment rate = (Unemployed /Labor Force)*100

                                      =10/70 *100

                                      =0.143 *100

                                       =14.3%

Therefore,Number of unemployed is 10 people and the unemployment Rate is 14.3%

c) Total employment by household survey = 25 + 20 + 5 + 10 + 10 = 70

             Total employment by household survey = 70 People

             Total employment by establishment survey = 25 + 20 + 2*5 + 10 = 65

            Total employment by establishment survey = 65 people