The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed workers and Et the number of employed workers in period t. The separation rate and the job finding rate in period t are correspondingly st and ft. Assume that Lt+1 = (1 + n) Lt and a share dt of the new workers, Lt+1 Lt, are employed immediately as they enter the labor force. Write and explain the equation describing the level of unemployment in period t + 1, Ut+1; as a function of current unemployment, Ut, current employment, Et, and increase in the labor force, Lt+1 L
The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed workers and Et the number of employed workers in period t. The separation rate and the job finding rate in period t are correspondingly st and ft. Assume that Lt+1 = (1 + n) Lt and a share dt of the new workers, Lt+1 Lt, are employed immediately as they enter the labor force. Write and explain the equation describing the level of unemployment in period t + 1, Ut+1; as a function of current unemployment, Ut, current employment, Et, and increase in the labor force, Lt+1 L
Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations
Section: Chapter Questions
Problem 7P
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The bathtub model of
Write and explain the equation describing the level of unemployment in period t + 1, Ut+1; as a function of current unemployment, Ut, current employment, Et, and increase in the labor force, Lt+1 L
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