Question

An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 part-time jobs, 5 has two part-time jobs, 10 is looking for jobs, 10 are discourage workers who has given up looking for jobs, 10 run their own businesses, 10 are retired, and 10 small children.
a) Calculate the labor force and the labor-force participation rate

b) Calculate the number of unemployed and the unemployment rate

c) Calculate total employment in two ways: as measured by the household survey and as measured by the establishment survey

Answer 1

Answer:

a. Labour Force = 70 people

Labour Force Participation Rate = 87.5%

b. Unemployed = 60 people

Unemployed Rate = 85.7 %

c. Total Employment

By Household Survey = 60 people

By Establishment Survey = 65 people

Explanation:

Given

Total number of People = 100

Full time = 25

Part time = 20

2 part time jobs = 5

Looking for job = 10

Not looking for job = 10

Business owners = 10

Retired = 10

Children = 10

a.

Labour Force = Total people in the economy - (Retired + Children + Not looking for job)

Labour Force = 100 - (10 + 10 + 10)

Labour Force = 100 - 30

Labour Force = 70 People

Labour Force Participation Rate is calculated by dividing the number of people actively participating in the labor force by the total number of people eligible to participate in the labor force

Number of active participant = Labour Force = 70

Number of eligible participants = 70 + 10 (discourage workers not looking for job)

Number of eligible participants = 80

Labour Force Participation Rate = 70/80

Labour Force Participation Rate = 0.875

Labour Force Participation Rate = 87.5%

b.

Unemployed People = Labour Force - 10 (people looking for job)

Unemployed People = 70 - 10

Unemployed People = 60 people

Unemployed Rate = Unemployed People/ Labour Force

Unemployed Rate = 60/70

Unemployed Rate = 0.857

Unemployed Rate = 85.7%

c.

Total Employment

I. Using Household Survey

Here, the number of people with source of income is counted

Total = Full-time +. Part time + 2 part time jobs + business owners

Total = 25 + 20 + 5 + 10

Total = 60 people

Ii. Using Establishment Survey

Here the number of jobs is counted. So, those with 2 part time job owners are counted as 5 * 2 jobs = 10

Total = Full-time +. Part time + 2 part time jobs + business owners

Total = 25 + 20 + 10 + 10

Total = 65 People