Question

1. Measuring employment, unemployment, and labor force participation

Consider a small economy composed of six people: Paolo, Sharon, Van, Amy, Deborah, and Carlos. Each person's employment status is described in the following table.

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.

Person	Status
Paolo is a 73-year-old professor. He teaches only one or two courses a year, but he's still pursuing an active research agenda.
Sharon is a 42-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.
Van is a 79-year-old retired professor. He enjoys volunteering at the local public library.
Deborah is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.
Carlos is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.
Amy is a 11-year-old student at East Valley Middle School. She babysits her younger brother and does other chores, so her parents give her an allowance of $30 per week.

Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.

Labor Force Participation RateLabor Force Participation Rate

=  =

According to this formula, what is the labor force participation rate of this economy of six people?

20%

60%

66.67%

200%

Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.

Unemployment RateUnemployment Rate

=  =

According to this formula, what is the unemployment rate of this economy of six people?

20%

60%

66.67%

200%

Answer 1

Paolo - Employed
(Because he is still working)

Sharon - Unemployed
(As she is looking for work)

Van - Not in the labor force
(Because he is retired.)

Deborah - Unemployed
(She is actively looking for work currently so she is unemployed.)

Carlos - Not in the labor force
(Because he is not looking for work yet)

Amy - Not in the adult population
(As Amy is younger than 16 years of age so she is not a part of the adult population.)

(So, employed = 1; unemployed = 2, labor force = employed + unemployed = 1+2 = 3; Adult population = 5)

Labor Force Participation Rate = (Total labor force/Total adult population)*100 = (3/5)*100 = 60%
60%

Unemployment Rate = (Unemployed people/Labor force)*100 = (2/3)*100 = 66.67%
66.67%