In equilibrium in the DMP model,labour force participation is
A) the ratio of market tightness to the cost of a vacancy.
B) increasing in market tightness.
C) decreasing with increases in the benefits from searching.
D) decreasing in market tightness.
E) not dependent on market tightness.

Question

Quizplus · Accepted Answer

In the DMP model, labor force participation is positively related to market tightness, as higher market tightness (more vacancies relative to job seekers) increases the probability of finding a job, encouraging more individuals to participate in the labor force.

In Equilibrium in the DMP Model,labour Force Participation Is