An economy has 100 people divided among the following groups: 25 have full-time jobs, 20 have one part-time job, 5 have two part-time jobs, 10 would like to work and are looking for jobs, 10 would like to work but are so discouraged they have given up looking, 10 are running their own businesses, 10 are retired, and 10 are small children. a. Calculate the labor force and the labor-force participation rate. b. Calculate the number of unemployed and the unemployment rate. c. Calculate total employment in two ways: as measured by the household survey and as measured by the establishment survey.

Answer: (A) I. 70. Ii. 77.78%

(B) I. 10. ii. 11.11%

(C). I. 70. ii. 50

Explanation:

A. Labor force = 25 + 20 + 5 + 10+10 = 70

Adult population = 100 - children = 100 - 10 = 90

Labor force participation rate = Labor force / Adult population

LFPR = (70 / 90) * 100 = 77.78%

B. Unemployed = 10

Unemployment rate = (10/90) * 100 = 11.11%

C. Employment through household survey =

Full time + part time jobs + looking for job + own business

= 25 + 20 + 5 + 10 + 10 = 70

Establishment survey the unpaid workers and the self owned business are not included in the employed. Under this survey it is not restricted by any age.

Employment = 25 + 20 + 5 = 50

Unemployed = looking for job + own business + discouraged worker + retired + small children = 10 + 10 + 10 + 10 + 10

= 50