Question

In​ 2013, Country A had a population aged 16 and over of 35​ million, a labour force participation rate of​ 70%, and an unemployment rate of​ 8%. In​ 2014, the population rose by​ 1%, the number of new entrants was 50​ 000, the number of employed habitants remained​ unchanged, and the unemployment rate decreased to​ 7.0000033%. What was the total number of dropouts and retirements in​ 2014?

Answer 1

In 2013:

Population = 35,000,000

LF participation = 35,000,000 × 70% = 24,500,000

Unemployment = LF participation × 8%

                           = 24,500,000 × 8%

                           = 1,960,000

Employment = LF participation – Unemployment

                        = 24,500,000 – 1,960,000

                        = 22,540,000

In 2014:

Population = 35,000,000 × (1 + 0.01)

                   = 35,000,000 × 1.01

                   = 35,350,000

LF participation = 24,500,000 + 50,000 = 24,550,000

Unemployment = LF participation × 8%

                           = 24,550,000 × 7.0000033%

                           = 1,718,500.81

Employment = Same as 2013

                        = 22,540,000

Dropouts and retirement = LF participation – (Unemployment + Employment)

                                          = 24,550,000 – (1,718,500.81 + 22,540,000)

                                          = 24,550,000 – 24,258,500.8

                                          = 291,499.2 (Answer)