Question

In: Economics

12,000 people are in the population.  1,000 are under age 16.  Of these people, 4,000 are not working...

  1. 12,000 people are in the population.  1,000 are under age 16.  Of these people, 4,000 are not working and not looking for work.  Another 1,000 are looking for work and not working.   Use this information to calculate the
    1. Size of the available population
    2. Size of the labor foce
    3. Number of unemployed
    4. The labor force participation rate
    5. The unemployment rate

Solutions

Expert Solution

a. The overall population is 12000 only as written clearly at the starting of this problem. There can be small subsets of unemployed, employed, under age 16 in this but the overall population is 12000.

b. Size of the labor force is the count of people who are eligible to work (and are not underage). Irrespective of whether they are working or not, labor force is the overall population eligible to work. In this case, it will 12000-1000 = 11000 (Overall population - Under age 16)

c. There are 5000 people unemployed (4000 not working and not looking for work and 1000 - looking for work but not working)

d. Labor force participation rate is the share of people employed out of the overall count of people who are willing to work. In this case, 6000 people are currently working (12000- 1000 (under 16)- 4000 (not working and not looking for work) - 1000 (looking for work). The denominator here is 11000 (12000- 1000 (under 16)). Hence labour force participation rate is 6000/11000 = 0.54 or 54%

e. The unemployment rate is the number of people unemployed as a share of total labor eligible force. Hence, unemployment rate is 1000/11000 = 0.09 or 9%

Rahul Sunny answered 2 years ago
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