Question

During the course of a year, the labor force consists of the same 984 people. Of theses, 16 lack skills that employers desire and hence remain unemployed throughout the year. At the same time, every month during the year, 37 different people become unemployed, and 37 other different people who were unemployed find jobs. There is no cyclical unemployment. A. calculate the frictional unemployment rate. =3.76

b. Calculate the unemployment rate.

c. Suppose that a system of unemployment compensation is established. Each month, 26 new people (not including the 16 lacking required skills) continue to become unemployed, but each monthly group of newly unemployed now takes two months to find a job. calculate the frictional unemployment rate after this change.

D. After the change discussed in part c, calculate the unemployment rate

Please provide answer and work for B-D

Answer 1

A) Because 37 people get job as 37 people gets unemployed,it means frictional unemployment is zero.

B)Given there is no cyclical unemployment.it means the unemployment rate Equal to natural rate of unemployment, which is equal to structural and frictional unemployment.

So structural unemployed=16

So unemployment rate=16/984]*100=1.63%

C) Now each month there will additional 26 people unemployed,due to people shifting in different jobs. So

Now frictional unemployed=26

Frictional unemployment rate=26/984]*100=2.64%

D) new natural rate of unemployment=(16+26)/984]*100=4.27%