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Chapter 21: Q 12. (page 524)

What happens to the unemployment rate when unemployed workers are reclassified as discouraged workers?

Short Answer

Expert verified

The unemployment rate will decline.

Step by step solution

01

Step 1. Definition

Discouraged workers are defined as the workers who have discontinued their looking for a job as they are not finding employment options and failed to be nominated for a job. Because of this they are discouraged and classified under discouraged workers.

02

Step 2. Explanation

Discouraged workers are neither employed nor unemployed. They are also out of the labor force.

03

Step 3. Conclusion

So, when unemployed workers are classified as discouraged workers the total workforce decreases, and in turn, the unemployment rate dips as the unemployed population declines because the unemployed are now classified under discouraged workers.

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Most popular questions from this chapter

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

After several years of economic growth, would you expect the unemployment in an economy to be mainly cyclical or mainly due to the natural rate of unemployment? Why?

Would you expect the natural rate of unemployment to be roughly the same in different countries?

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