In: Economics
If the number of discouraged searchers increases, everything else remaining the same, then the |
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LF=Employed+ Unemployed
Unemployment rate= (unemployed / LF)*100
Labor force participation rate= (Labor Force/ adult population)*100
Since adult population is also known as the civilian non-institutional population
Hence labor force participation rate is the ratio of the labor force and the civilian non-institutional population.
LF=Employed + unemployed + Part-time employed
Unemployment rate= (unemployed / LF)*100
The discouraged workers are those workers who have stopped searching for work, by remaining unemployed for many months.
Hence when the unemployment rate increases, then few of them will stop searching job, after trying many times. Hence they will leave labor force. Therefore labor force decreases.
Hence the labor force participation rate will tend to fall.
Hence it can be said that If the number of discouraged searchers increases, everything else remaining the same, then the labour force participation rate decreases.
Hence option third is the correct answer.