Suppose that 20,000 of the employed switch to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate.
Suppose that 20,000 of the employed switch to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate.
Economics (MindTap Course List)
13th Edition
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter6: Macroeconomic Measurements, Part I: Prices And Unemployment
Section: Chapter Questions
Problem 6WNG
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Using the following data calculate:
(iv) The Labour Force Participation rate.
(v) The “official”
currently working | 23,000 volunteer workers |
9845(ages 13-14) looking for work | 12,000 (ages 15)looking for work |
45,600 Part-time workers | 56 family workers who worked 15 hrs a week |
234 self-employed | 6543 discouraged workers |
67,432(ages 23-25)looking for work | 67,890 laid off receptionists looking for work |
544,321(ages 16-20) looking for work) | current population is 6,000,000 |
5654 Temp workers | 5000 armed forces |
543 recent university graduates that are going back to graduate school | 3500 institutionalized |
c) Suppose that 20,000 of the employed switch to jobs in the underground economy. When interviewed by STATIN, 50% of these switchers report that they are not working and not seeking work, while the other 50% report that they are not working but seeking work. Explain what happens to the official unemployment rate and the “true” unemployment rate.
(d) explain the impact of an increase in the income tax rate from 25 percent to 35 percent on the demand for labor, supply of labor, equilibrium wage, and level of employment.
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