a.Calculate the employment population ratio, the labor force participation rate,

Question

a.Calculate the employment population ratio, the labor force participation rate, the employment rate and the unemployment rate in the year 2017.

b. A broader measure of unemployment, called the under-employment rate, also includes as unemployed discouraged workers and those who work part-time for economic reasons. Calculate the under-employment rate in the year 2017.

c.The natural rate of unemployment in 2017 was 4.74%, calculate the cyclical unemployment rate.

United States (in millions) National Population 2017 325.7 70.6 255.1 94.8 1.6 160.3 153.3 5.0 7.0 Children+ active military+institutionalized persons Potential workers Not in Labor force Discouraged Labor force lotal Emploved Derso113 Employed Partime for Economic Reasons Unemploved persons

Explanation / Answer

(a)

Employment-Population ratio = Number employed / National population = 153.3/325.7 = 0.4707 = 47.07%

Labor force participation rate = Labor force / Potential workers = 160.3/255.1 = 0.6284 = 62.84%

Employment rate = Number employed / Labor force = 153.3/160.3 = 0.9563 = 95.63%

Unemployment rate = (100 - Employment rate)% = 100% - 95.63% = 4.37%

(b)

Number unemployed (Million) = Unemployed persons + Discouraged workers + Part-time for economic reasons

= 7 + 1.6 + 5 = 13.6

Labor force (Million) = Labor force + Discouraged workers + Part-time for economic reasons

= 160.3 + 1.6 + 5 = 166.9

Under-employment rate = 13.6/166.9 = 0.0815 = 8.15%

(c)

Natural unemployment rate = Cyclical unemployment rate + Frictional unemployment rate

4.74% = Cyclical unemployment rate + 4.37%

Cyclical unemployment rate = 4.74% - 4.37% = 0.37%

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