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Please try to explain this diagram clearly. thanks! Fig. 6.6 Labour market flows N (s + Z)f N Ns (1-f) A Uf OLF Note: The

Please try to explain this diagram clearly. thanks!

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Fig. 6.6 Labour market flows N (s + Z)f N Ns (1-f) A Uf OLF Note: The notation is explained in Section 6.2. N is employment, U is unemployment and OF is the stock of workers outside the labour force. The probability to find a job is f for an employed job seeker is and if for an unemployed job seeker. A share Z of the employed workers seek another job and switch if they find one. A fraction s of the employed workers leave their jobs for exogenous reasons and seek another job. Thus the flow from unemployment to employment is ALIf, the turnover between jobs is N (s + Z)f, and the flow from employment to unemployment is Ns (1-f)

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