2 Nonemployment flows In this section, we will generalize what we learned about finding the steady state for the unemployment rate. Now, consider a third state, called nt. This is like a "low search" group. In addition, there is the regular unemployment group, the fraction of the labor force in this group is called ut. - The employment rate is 1utnt - Workers can enter normal unemployment group by separating from employment at rate s or by beginning to search harder, moving from n to u at rate . - Workers exit unemployment group ut by finding jobs at rate f The transitions in and out of the group nt are given by 1 - Workers who were in low search state begin searching harder, moving out of n and into u at rate . - Employed workers move into state n at rate r With this information: 1 1. Write the law of motion for ut. That is write how ut+1 is determined as a function of ut,nt and the rates described above 2. Write the law of motion for nt. That is write how nt+1 is determined as a function of ut,nt and the rates described above 3. Let u,n be the steady states, solve for u and n as a function of the rates. Given what you wrote in the prior two parts, this is solving a system of two equations with two unknowns