C3. [35 marks] A country with a working-age population of PW has the following labour market structure: LF - labour force, E - the number of employed people, U - the number of unemployed people, NLF - the number of inactive people. In each period a share ay of inactive people joins the pool of unemployed while a share ag of them is hired. Over the same period a share Be employed people leaves the labour force while a share B,, of unemployed becomes discouraged and stops actively searching for job. In turn, the hiring rate h shows the share of unemployed people that are hired in each period while the rate of job loss shows the share of those with work who become unemployed in each period. (a) [25 marks] Using the intensities of the labour market flows derive the formula for the equilibrium (steady state) rate of unemployment. HINT: consider a system of simultaneous equations NOT a single steady state condition. (b) [10 marks] Analyse the determinants of the equilibrium unemployment derived in (a) algebraically and formulate the results in words. C3. [35 marks] A country with a working-age population of PW has the following labour market structure: LF - labour force, E - the number of employed people, U - the number of unemployed people, NLF - the number of inactive people. In each period a share ay of inactive people joins the pool of unemployed while a share ag of them is hired. Over the same period a share Be employed people leaves the labour force while a share B,, of unemployed becomes discouraged and stops actively searching for job. In turn, the hiring rate h shows the share of unemployed people that are hired in each period while the rate of job loss shows the share of those with work who become unemployed in each period. (a) [25 marks] Using the intensities of the labour market flows derive the formula for the equilibrium (steady state) rate of unemployment. HINT: consider a system of simultaneous equations NOT a single steady state condition. (b) [10 marks] Analyse the determinants of the equilibrium unemployment derived in (a) algebraically and formulate the results in words