Chapter 12, Problem 1CYU

To determine

The impact of easiness in job seeking on the unemployment rate in the given scenarios.

Explanation of Solution

When job-seekers get jobs more quickly, the number of unemployed people in the labor market will fall, which in turn reduces the unemployment rate. So, employment websites cause the unemployment rate to fall over time.

These websites ease the job-searching process, which encourages job-seekers to enter the labor market again. On one hand, the entry of these job-seekers increases the size of the labor force while, on the other hand, these people will get jobs more quickly and thus, reduce the number of unemployed people.

The overall ratio of the number of unemployed people to the labor force in an economy will depend on the magnitude of change in labor size and unemployment. So, it is ambiguous to determine the impact on the unemployment rate in the second scenario.

Economics Concept Introduction

People are considered unemployed if they are not working currently but actively looking for a job. The unemployment rate is the ratio of the number of unemployed people to the labor force in an economy.

  $\text{Unemployment}\text{rate = }\frac{\text{Number}\text{of}\text{unemployed}\text{people}}{\text{Labor}\text{force}}\text{×100}$

Where the labor force is the sum of employed and unemployed people in an economy.