Question

1) When you or one of your friends is looking for a part-time job, how many weeks does it typically take? After you find a job, how many weeks does it typically last?

2) From your estimates, calculate (in a rate per week) your rate of job finding f and your rate of job separation s. (Hint: If f is the rate of job finding, then the average spell of unemployment is 1/f.)

3) What is the natural rate of unemployment for the population you represent?

Answer 1

ans....

a. It takes almost 5 months (20 weeks) to find a job. It lasts on an average for 100 months (400 weeks).

While getting a part time job it is necessary to mention all the parameters and check that the payment is made or not. It is not enough for mentioning the time limit of getting a job and there is not any time limit that how much time the job will last only upon the capability of the person who is working on part time.

b. L= E+U (L=labour force, E= employed, U=unemployed)

f = the rate of job finding: the fraction of “unemployed” workers who find jobs each month

s = the rate of job separation: the fraction of “employed” workers who lose jobs each month

fU = the number of “unemployed” workers who find jobs each month

In a steady-state labor market (where number of people finding job= number of people loosing job): fU = sE

fU = s(L – U)

fU = sL – sU

sU + fU = sL

(s + f)U = sL

U/L = s / s+f

Thus,

s = 0.01: calculating on percentage basis

f = 0.20: calculating on percentage basis

c.Natural rate of unemployment is the unemployement which is based upon the structural and frictional unemployment.When the output and employment are at it fullest then the unemployment prevails.The difference between the actual and real rate of employement is called Cyclical unemployment.A negative unployment is a result of output and employment exceed their full-employment levels.

Natural rate of unemployment= U/L

U/L= s / s+f = 0.01/0.21 = 4.8%