Part C D The US labor market is such that in each month 2% of the employed lose their jobs, while 25% of the unemployed find a job. We assume that unemployment is measured at the month frequency. a. What is average duration of employment? b. What is the average duration of unemployment? c. What is the steady-state level of the unemployment rate? d. Assuming that the Chinese economy starts at rate of unemployment of 4%, what will be the unemployment rate after 12 months? Explain the forces that lead to the change in the unemployment rate within one year Hint: Use unemployment dynamics formula and a method similar to the dynamics of capital in the Solow model. Use excel for calculations if needed.
Part C D The US labor market is such that in each month 2% of the employed lose their jobs, while 25% of the unemployed find a job. We assume that unemployment is measured at the month frequency. a. What is average duration of employment? b. What is the average duration of unemployment? c. What is the steady-state level of the unemployment rate? d. Assuming that the Chinese economy starts at rate of unemployment of 4%, what will be the unemployment rate after 12 months? Explain the forces that lead to the change in the unemployment rate within one year Hint: Use unemployment dynamics formula and a method similar to the dynamics of capital in the Solow model. Use excel for calculations if needed.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Part C D
The US labor market is such that in each month 2% of the
employed lose their jobs, while 25% of the unemployed find a job. We assume that
at the month frequency.
a. What is average duration of employment?
b. What is the average duration of unemployment?
c. What is the steady-state level of the unemployment rate?
d. Assuming that the Chinese economy starts at rate of unemployment of 4%, what will be the unemployment
rate after 12 months? Explain the forces that lead to the change in the unemployment rate within one year
Hint: Use unemployment dynamics formula and a method similar to the dynamics of capital in the Solow
model. Use excel for calculations if needed.
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