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. ute=1, a - accession rate, s-separation rate, ut+1= up+set-aut, Aut+1 = s(1-up)-aut, steady-state unemployment rate 0 = s/(s+a), A=1-(s+a) - speed-of-adjustment parameter; smaller A corresponds to a more dynamic labor market. Assume 0