Question

1. Measuring employment, unemployment, and labor force participation Consider a small economy composed of six people: Nick, Rosa, Tim, Alyssa, Crystal, and Brian. 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 Nick is a 75-year-old professor. He teaches only one or two courses a year, but he's still pursuing an active research agenda.

Rosa is a 34-year-old professional basketball player. She finished her last season as a player 3 weeks ago and is currently interviewing for a coaching position.

Tim is a 45-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.

Crystal is a 29-year-old who lost her job as an associate producer for a radio station. After spending a few weeks out of work and interviewing for several other positions, she gave up on her job search and decided to go back to grad school. She made that decision a few months ago.

Brian is a famous novelist. He is spending the summer at his lake house in upstate New York, doing a little writing each day but mostly spending his time gardening and reading.

Alyssa is a 13-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 $25 per week.

Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS. According to this formula, what is the labor force participation rate of this economy of six people? 33.33% 40% 50% 60% Complete the right half of the following equation to reflect the unemployment rate reported by the BLS. According to this formula, what is the unemployment rate of this economy of six people? 33.33% 40% 50% 60%

Answer 1

Employment status of the six people are:

1. Nick - Employed

2. Rosa - Unemployed

3. Tim - Not in the labor force

4. Crystal - Not in the labor force

5. Brian - Employed

6. Alyssa - Not in the adult population

Labor force participation rate = 100 x (Number in labor force/Adult Population)

= 100 x (3/5)

= 60%

Therefore, Labor force participation rate of this economy of six people is 60%

Unemployment rate = 100 x (Number of unemployed workers/labor force)

= 100 x (1/3)

= 33.33%

Therefore, Unemployment rate of this economy of six people is 33.33%