Suppose a country has 100 million inhabitants. The population can be divided into the employed, the unemployed, and the persons who are out of the labor force (OLF). In any given year, the transition probabilities among the various categories are given by:

These transition probabilities are interpreted as follows. In any given year, 2 percent of the workers who are employed become unemployed; 20 percent of the unemployed find jobs, and so on. What will be the steady-state unemployment rate?

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Moving Into: Employed 0.94 Unemployed 0.20 OLF Employed Unemployed OLF 0.02 0.65 0.03 0.04 0.15 0.92 Moving From: 0.05