What happens to the unemployment rate when officially unemployed people become discouraged workers?…

Employment and Unemployment

1. What happens to the unemployment rate when the number of unemployed people increases, ceteris paribus?

When the labor force grows, ceteris paribus?

2. How might the official unemployment rate understate the “true” degree of unemployment? How might it overstate it?

3. Why might the fraction of the unemployed who are job leavers be higher in a period of strong labor demand?

4. Suppose you live in a community of 100 people. If 80 people are over 16 years old and 72 people are willing and able to work, what is the unemployment rate in this community?

5. What would happen to the unemployment rate if a substantial group of unemployed people started going to school full time? What would happen to the size of the labor force?

6. What happens to the unemployment rate when officially unemployed people become discouraged workers? Does anything happen to employment in this case?

 

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