Suppose a country using the United States' system of calculating official unemployment statistics has 100 million people, of whom 50 million are working age. Of these 50 million, 20 million have jobs. Of the remainder: 10 million are actively searching for jobs; 10 million would like jobs but are not searching; and 10 million do not want jobs at all. a. Calculate the labor force b. What is the labor force participation rate? c. What is the official unemployment rate?

Instructions are listed below.

Explanation:

Giving the following information:

100 million people, of whom 50 million are working age.

Of these 50 million, 20 million have jobs. Of the remainder: 10 million are actively searching for jobs; 10 million would like jobs but are not searching, and 10 million do not want jobs at all.

We need to know the following concept:

The economic active people are those that are on working age and have a job or are actively looking for one.

Labor force = economic active people

Labor force = 20,000,000 + 10,000,000 = 30,000,000

Labor force participation = labor force / working-age population

Labor force participation = 30,000,000 / 50,000,000 = 0.6 = 60%

Unemployment rate = unemployed population / labor force

Unemployment rate = 10,000,000/30,000,000 = 0.33 = 33%