As the economy improves after a recession, previously discouraged workers often rejoin the labor force and search for employment because the chances of finding a job have increased. All else equal, this phenomenon would cause the unemployment rate to:

Question

Social Studies

Cindy

14 May, 14:40

As the economy improves after a recession, previously discouraged workers often rejoin the labor force and search for employment because the chances of finding a job have increased. All else equal, this phenomenon would cause the unemployment rate to:

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Answers (1)

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Edward Rubio · Answer 1

The unemployment rate increases, because these workers join the laborforce. Since the unemployment rate is a calculation based on how many people are unemployed in the laborforce, it will increase.

Explanation:

At the beginning when these workers join the laborforce, the rate will increase, but if we are talking about an economy in recovery cycle, the labor market will adjust and integrate these people into the employed laborforce which will cause the rate of unemployment drops again, so this type of unemployment is called cyclical unemployment.