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Unemployment Question The small country of Macroland has a population of 100,000 people over the age...

Unemployment Question The small country of Macroland has a population of 100,000 people over the age of 18 and under 65. There are 50,000 people under the age of 18, and 20,000 people over the age of 65. The number of people between ages of 18 and 65 that are looking for jobs is 20,000, and the number that have jobs is 50,000. Using this information, answer the following questions. Show your work. These are numbers for the month of January.

Now assume there were some changes in February. Of the people between the ages of 18 and 65 in Macroland, about 2000 who were looking for work now dropped out of the labor market, and stop looking for work. In addition, 8000 people who were previously unemployed in January got jobs in February. However, 3000 who had jobs in January lost their jobs, and all of them qualify for unemployment insurance and are looking for work. Using this information, answer the following questions. Show your work.

d. What is the labor force of Macroland for people between the ages of 18 and 65 in February?

e. What is the unemployment rate of Macroland for people between the ages of 18 and 65 in February?

f. How many discouraged workers are there in February?

Solutions

Expert Solution

Population between Age 18 to 65 = 100,000

Unemployed between 18 to 65 = 20,000

Employed between 18 to 65 = 50,000

Original Labour Force = Unemployed + Employed

= 20,000 + 50,000 = 70,000

February

2000 people dropped out of labour force

New Labour Force = 70,000 - 2000 = 68000

Also, 8000 people who were unemployed got work. It means that these were already part of labor force and now also they will be part of labor force. These will be deducted from Unemployed and added to employed.

3000 people who had jobs become unemployed in februrary but still will be part of labor force.These will added to unemployed and decducted from employed.

Also, 2000 people who were considered unemployed have now stopped looking for work and are now out of labour force and will be considered as discouraged workers. These will be deducted from Unemployed.

New Unemployed = 20,000 - 8000 + 3000 - 2000 = 13000

New Employed = 50,000 + 8000 - 3000 = 55000

Part a

New Labour Force = New Unemployed + New Employed

= 13000 + 55000 = 68000

Part b

Unemployment Rate

= Total Unemployed / Labour Force * 100

= 13000 / 68000 * 100

= 19.1%

Part c

Discouraged Workers are the people who have stopped looking for work and have been considered out of labour force as they are not looking for work actively

= 2000

Rahul Sunny answered 1 year ago
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