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QUESTION:

. Measuring employment, unemployment, and labor force participation

Consider a tiny hypothetical economy composed entirely of the following people: Nick, Rosa, Tim, Alyssa, Crystal, and Brian. Each person's employment status is given in the following table.
Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.
PersonStatus
Nick is a 75-year-old professor. He teaches only one or two courses a year, but still publishes research at a productive rate.    
Rosa is a 40-year-old steelworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.    
Tim is a 48-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.    
Crystal is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.    
Brian is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.    
Alyssa is a 13-year-old student at Moutain River Middle School. She babysits her younger siblings and does other chores, so her parents give her an allowance of $20 per week.    
Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.
Labor Force Participation Rate =     
According to this formula, what is the labor force participation rate of this economy of six people?
Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.
Unemployment Rate =     
According to this formula, what is the unemployment rate of this economy of six people?

ANSWER:

Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person’s status as employed, unemployed, “not in the labor force” (if not in the civilian labor force but still part of the adult population), or “not in the adult population” if not in the civilian adult population.
PersonStatus
Nick is a 75-year-old professor. He teaches only one or two courses a year, but still publishes research at a productive rate.Employed  Correct 
Rosa is a 40-year-old steelworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.Unemployed  Correct 
Tim is a 48-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.Not in the labor force  Correct 
Crystal is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.Unemployed  Correct 
Brian is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.Not in the labor force  Correct 
Alyssa is a 13-year-old student at Moutain River Middle School. She babysits her younger siblings and does other chores, so her parents give her an allowance of $20 per week.Not in the adult population  Correct 
Points:
1 / 1
Close Explanation
Explanation:
The BLS considers a person to be unemployed if he or she is in the adult population, did not work for pay in the previous week, and has actively looked for work during the preceding 4 weeks. By this definition, the BLS classifies Rosa and Crystal as unemployed.
Anyone in the adult population who worked for pay in the last week, even if unsatisfied with his or her job, is considered employed. By this definition, the BLS classifies Nick as employed.
Because Tim and Brian are not actively seeking employment, they are not considered part of the labor force. Note that not being in the labor force is different from being unemployed. Once people leave the labor force, they are not counted when calculating the unemployment rate.
Because Alyssa is under the age of 16, she is not considered part of the adult population.
Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS.
Labor Force Participation Rate = 100×Number in Labor ForceAdult Population  Correct 
Points:
1 / 1
According to this formula, what is the labor force participation rate of this economy of six people?
Correct
Points:
1 / 1
Close Explanation
Explanation:
The BLS defines the labor force participation rate as the fraction of the adult population that is in the labor force—that is, those who are employed or else unemployed and actively searching for work.
By this definition, Nick, Rosa, and Crystal are part of the labor force because they are either working or searching for a job. In contrast, because Tim and Brian are not actively seeking employment, they are not considered part of the labor force. And because Alyssa is under the age of 16, she is not considered part of the adult population, and is therefore not part of the labor force.
Because the adult population in this small economy is five people, and because three of them are in the labor force, the labor force participation rate is 35=60%.
Labor Force Participation Rate = 100×35
 = 60%
Complete the right half of the following equation to reflect the unemployment rate reported by the BLS.
Unemployment Rate = 100×Number of Unemployed WorkersLabor Force  Correct 
Points:
1 / 1
According to this formula, what is the unemployment rate of this economy of six people?
Correct
Points:
1 / 1
Close Explanation
Explanation:
The BLS defines the unemployment rate as the fraction of the labor force that is unemployed.
Nick, Rosa, and Crystal are part of the labor force because they are either working or searching for a job.
The BLS considers a person to be unemployed if he or she is in the adult population, did not work for pay in the previous week, and has been actively seeking work during the preceding 4 weeks. By this definition, the BLS classifies Rosa and Crystal as unemployed.
Since the size of the labor force in this small economy is three people, and since two of them are unemployed, the unemployment rate is computed as follows.
Unemployment Rate = 100×23
 = 66.67%

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