Chapter 15, Problem 1QR

To determine

Computation of labor force, unemployment rate, and labor force participation rate.

Explanation of Solution

Measuring unemployment is done by BLS (Bureau of Labor Statistics), which is a part of the Department of Labor. The BLS categorizes all the adults in three groups. They are employed, unemployed, and labor force.

Labor force: Labor force consists of all employed and unemployed workers.

Unemployment rate: Unemployment rate refers to the percentage of unemployed people to the labor force. Unemployment is a situation that occurs in an economy when the able and willing person cannot find any work or job. However, these people are keenly seeking for jobs. Unemployment can be calculated as follows:

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

Labor force participation rate: Labor force participation rate refers to the number of individuals who are actively working or looking for a job. This can be calculated by using the following formula:

$\text{Labor force participation rate}=\frac{\text{Labor force}}{\text{Working age popultion}}\times 100$

Economics Concept Introduction

Concept introduction:

Unemployment: Unemployment refers to a situation where the workers are ready to offer their labor at the existing market wage rate and are actively searching for a job but fail to find a job. It is the situation where the market fails to absorb the whole labor force.

Labor force: Labor force refers to the sum of employed and unemployed workers in an economy.