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True or False: During a recession, the discouraged-worker effect and the added-worker effect work in opposite...

True or False:

  1. During a recession, the discouraged-worker effect and the added-worker effect work in opposite directions in affecting the size of the labor force.
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Answer #1

Answer ‐..... True

It is true that during recession the added worker effect (AWE) and discouraged worker effect (DWE) works in the opposite direction , affecting the size of workforce. Discouraged workers are not part of labor force as they are not actively seeking for a job , it happens most with women whose husbands are added workers. During recession with layoffs these discouraged workers respond and now they actively search for a job with their partner. So labor force in the economy gets increased. In such a situation the added workers become discouraged workers and discouraged workers turn into added workers.

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