(a) All else constant, what effect does an increase in the quit rate have on the unemployment rate? (b) Do you consider job quits as frictional or structural unemployment? Why? (c) What happens to the quit rate during the recession of 2008? Why? Do we see the same effect in the recession of 2020?
8. The attached charts (Quits: Total Nonfarm) shows the quit rate (the number of who quit their job during the entire month as a percentage of total employment) and the
(a) All else constant, what effect does an increase in the quit rate have on the unemployment rate?
(b) Do you consider job quits as frictional or structural unemployment? Why?
(c) What happens to the quit rate during the recession of 2008? Why? Do we see the same effect in the recession of 2020?
(d) What happened to the unemployment rate during the recessions of 2008 and 2020? How do you reconcile this answer with your answers for items (a) and (c)?
(e) Use your answers to explain why the unemployment rate will never fall to zero and a certain amount of unemployment is desirable.
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