Answered step by step
Verified Expert Solution
Question
1 Approved Answer
P- adult population, L-labor force, E- employed, U-unemployed, L=E+U, e=E/P - employment rate, m=L/P - participation rate, u=U/L - unemployment rate, U+E=L, u+e=1, a -
P- adult population, L-labor force, E- employed, U-unemployed, L=E+U, e=E/P - employment rate, m=L/P - participation rate, u=U/L - unemployment rate, U+E=L, u+e=1, a - accession rate, s-separation rate, u(t+1)= u(t)+s*e(t)-a*u(t), u(t+1) = s(1-u(t))-a*u(t), steady-state unemployment rate = s/(s+a), =1-(s+a) - speed-of-adjustment parameter; smaller corresponds to a more dynamic labor market. Assume 0 < s+a < 1. If capital K=const, then with the Cobb-Douglas production function the demand for labor is L=K*(p(1-)A/w)^(1/), where p is price of one unit of output, w is wage. Given: P=250, E=120, U=15. Find unemployment rate
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started