Consider an economy with a labor force of 200 million people of which 180 million are employed while 20 million are unemployed. Each period, 45% of the unemployed population finds a job. If the economy is in a steady-state of unemployment, what percent of the employed population lose their job each period?

Question

Quizplus · Accepted Answer

5%In a steady-state, the number of people finding jobs equals the number of people losing jobs. With 20 million unemployed and 45% of them finding jobs each period, 9 million (45% of 20 million) find jobs. To maintain a steady-state, 9 million of the 180 million employed must lose their jobs, which is 5% (9 million / 180 million * 100%).

Consider an Economy with a Labor Force of 200 Million