Question

Of the 500,000 people (age 16+) in a particular country, 300,000 people are in the labor force. Of these, 240,000 are employed and 60,000 are unemployed. Of the 200,000 workers not in the labor force, 20,000 want jobs but have given up looking for one. What is the unemployment rate if discouraged workers (i.e., the hidden unemployed) are counted as being unemployed?

Answer 1

Answer:

25%

Explanation:

Given:

Unemployed labor = 60,000

Workers wanting job = 20,000

Thus,

Total unemployed labor = Unemployed labor + Workers wanting job

=  60,000 + 20,000

or

Total unemployed labor = 80,000

Now,

the Total labor force with discouraged workers =  people are in the labor force + Workers wanting job

or

= 300,000 + 20,000

or

labor force with discouraged workers = 320,000

Therefore,

Unemployment rate with discouraged workers

=  (Total unemployed labor / labor force with discouraged workers) × 100

or

= ( 80,000 / 320,000 ) × 100

or

Unemployment rate with discouraged workers  = 25%