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Chapter 8: Q.12 (page 214)

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

Short Answer

Expert verified

If unemployed workers become discouraged, then the measured percentage will remain fall.

Step by step solution

01

Step.1 Introduction

Those workers who do not have a job and eventually stop looking for one are referred to as discouraged workers. These workers are not included in the labor force.

02

Step.2 Explanation

If unemployed workers become discouraged, the measured percentage would decline. This is because discouraged workers are not counted in labor force or unemployed workers. So, the value of both will decline. As a result, unemployment rate, which is a ratio of the two will also fall.

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Most popular questions from this chapter

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

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When would you expect cyclical unemployment to be rising? Falling?

Over the long term, has the U.S. unemployment rate generally trended up, trended down, or remained at basically the same level?

What happens to the labor force participation rate when employed individuals are reclassified as unemployed? What happens when they are reclassified as discouraged workers?
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