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Chapter 8: Q.8 (page 214)

What is the difference between being unemployed and being out of the labor force?

Short Answer

Expert verified

Unemployed means able and willing to work but no job. Out of labor force means not willing to work.

Step by step solution

01

Step.1 Introduction

Unemployment can be defined as the situation when a person who is able to work and is work, is also actively looking for jobs but is not able to find one. The percentage of working population that cannot find work is known as unemployment rate.

02

Step.2 Explanation

The unemployment rate can be obtained by the ratio of total unemployed persons and labor force participation rate.

The percentage of adult population who are able to work and willing to work are included in the labor force. This consists of both people who are working, i.e. employed, and those who can't find work i.e unemployed.

03

Step 3. Difference

Out of labor force means the part of adult population that is not willing to work or not able to work. For instance, retired individuals, students, parents on a maternity break, etc.

Being unemployed means a person is consistently looking for jobs but is not able to find one. When out of labor force, people are not looking for jobs actively.

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Most popular questions from this chapter

A country with a population of eight million adults

has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force. What’s the unemployment rate? What share of population is in the labor force? Sketch a pie chart that divides the adult population into these three groups.

Are U.S. unemployment rates distributed evenly across the population?

As the baby boomer generation retires, what should happen to wages and employment? Can you show this graphically?

Name and explain some of the reasons why wages are likely to be sticky, especially in downward adjustments.

Is the higher unemployment rates for minority workers necessarily an indication of discrimination? What could be some other reasons for the higher unemployment rate?
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