Question 1: Suppose that you have Population: 100,000 Unemployed: 3,000
Employed: 60,000 Not in labor force: 37,000
The size of the labor force:
Labor force: all individuals 16 years of age and over who work for pay or profit or actively seek paid employment Employed + Unemployed= 60000+3000=63000
The labor force participation rate:
=N. people in L force/ Total N. people= 63000/100000=63%
=N. unemployed/Total N. people= 3000/100000=3%
Individuals who would like a job, but did not work during the prior four weeks are classified as not in the labor force. Such as marginally attached workers and discouraged workers.
Economic factors: The increase in the labor force attachment of women of the life cycle and the increased commitment to the labor force, the higher education and the technology.
If a economic downturn occur, all the number of employed, number of unemployed and the number of “not in the labor force” will decrease, because, if the primary earner becomes unemployed, other family members may enter the labor force, but during the economic downturn, it is difficult to find jobs. Moreover, if people lose their jobs, it is possible they may become discouraged and drop out of the labor force.
Explain why men’s labor force participation decreased. Why do same factor not cause the decline of women’s participation? The decline in the participation rate s of the younger men is mainly due to their tendency to remain in school longer. It is reflects the increase skills demanded by advanced economy. Also, with rising real incomes, families are able to keep their children in school longer not only because they can better afford to pay the bills but also because they can better afford to forgo the contribution their children might otherwise make to family income. The long-term of older males is often viewed as evidence of the dominance of the income effect over the substitution...
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