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Please refer to image for question 7) Suppose a cohort of 25,000 people become unemployed. You are told that the job finding rate for this
Please refer to image for question
7) Suppose a cohort of 25,000 people become unemployed. You are told that the job finding rate for this group depends on the elapsed duration of the unemployment spell as follows: Spell Duration Job Finding Rate (months) 0.60 2 0.20 3 0.20 4 0.20 5 0.20 6 0.10 a) Explain in economic terms why the job finding rate might decline with spell duration. b) Calculate how many unemployment months this cohort will experience in total. c) Compute the fraction of people (out of 25,000) who will be "long-term" unemployed, here defined as having unemployment spells of 5 months or longer. d) What fraction of unemployment months do this long-term unemployed group account for? e) For this cohort, does the "unemployment problem" seem to be too many job losses or too many long spellsStep by Step Solution
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