Essentials of Economics
Essentials of Economics
4th Edition
ISBN: 9781464186653
Author: Paul Krugman, Robin Wells
Publisher: Worth Publishers
Question
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Chapter 14, Problem 5P
To determine

To determine: The number of workers employed in each region during the given period of time.

Concept Introduction

Labor Force: Labor force refers to the total number of workers in an economy which includes employed as well as unemployed workers.

Expert Solution & Answer
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Explanation of Solution

a. Number of employed workers in April 2013 and April 2014.

The formula to calculate the number of employed workers is as follows:

    Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  1

The below table shows the calculation of employed workers:

April 2013

    RegionLabor Force(Thousands)(A)Unemployed Workers(Thousands)(B)Employed Workers(Thousands)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  2
    Northeast 28,407.2 2,174.4 26,232.8
    South 56,787.8 4,089.9 52,697.9
    Midwest 34,320.0 2,473.7 31,846.3
    West 36,122.2 2,940.8 33,181.4
    Total143,958.4

April 2014

    RegionLabor Force(Thousands)(A)Unemployed Workers(Thousands)(B)Employed Workers(Thousands)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  3
    Northeast 28,288.9 1,781.3 26,507.6
    South 57,016.4 3,363.8 53,652.6
    Midwest 34,467.0 2,109.0 32,358.0
    West 36,307.3 2,535.7 33,771.6
    Total146,289.8

The change in the number of employed workers between April 2013 and April 2014 shall be calculated as follows:

    Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  4

Conclusion:

Thus, there is an increase in number of employed workers between April 2013 and April 2014.

b. Growth in labor force.

The formula to calculate the growth in labor force between April 2013 and April 2014 is as follows:

    Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  5

The below table shows the calculation of growth in labor force in each region:

    RegionLabor Force in April 2013(Thousands)(A)Labor Force in April 2014(Thousands)(B)Growth in Labor Force(%)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  6
    Northeast 28,407.2 28,288.9 Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  7
    South 56,787.8 57,016.4 0.41
    Midwest 34,320.0 34,467.0 0.43
    West 36,122.2 36,307.3 0.51

Conclusion:

Thus, there is a decrease in labor force in the Northeast and a growth in other regions.

c. Unemployment rates in different regions.

The formula to calculate the unemployment rate is as follows:

    Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  8

The below table shows the calculation of unemployment rate in each region:

April 2013

    RegionLabor Force(Thousands)(A)Unemployed Workers(Thousands)(B)Unemployment Rate(%)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  9
    Northeast 28,407.2 2,174.4 7.65
    South 56,787.8 4,089.9 7.20
    Midwest 34,320.0 2,473.7 7.21
    West 36,122.2 2,940.8 8.14

April 2014

    RegionLabor Force(Thousands)(A)Unemployed Workers(Thousands)(B)Unemployment Rate(%)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  10
    Northeast 28,288.9 1,781.3 6.3
    South 57,016.4 3,363.8 5.9
    Midwest 34,467.0 2,109.0 6.12
    West 36,307.3 2,535.7 6.98

Conclusion:

Thus, there is a decrease in unemployment rate in all the regions between April 2013 and April 2014.

d. Reason for fall in unemployment rate.

The unemployment rate has decreased in all the regions between April 2013 and April 2014.

The decrease in unemployment rate is shown in the table below:

    RegionUnemployment RateApril 2013(A)(%)Unemployment RateApril 2014(B)(%)Fall in Unemployment Rate(%)Essentials of Economics, Chapter 14, Problem 5P , additional homework tip  11
    Northeast 7.65 6.3 1.35
    South 7.20 5.9 1.3
    Midwest 7.21 6.12 1.09
    West 8.14 6.98 1.16
  • It can be seen that in the regions of South, Midwest and West, the labor force has increased from April 2013 to April 2014.
  • Hence, in these regions, the fall in unemployment rate is due to considerable net gain in the number of jobs.
  • However, there is decrease in labor force in Northeast and still there is fall in unemployment rate due to the fall in number of people seeking jobs.

Conclusion:

Thus, there is a fall in unemployment rate.

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