Labor Force and Unemployment Rates Calculation

What are the initial unemployment rate and labor force participation rate?

At the beginning of the month, the number employed (E) equals 120 million, the number not in the labor force (N) equals 70 million, and the number unemployed (U) equals 10 million. Flows occurred during the month: EU 1.8 million, EN 3.0 million, UE 2.2 million, UN 1.7 million, NE 4.5 million, NU 1.3 million. Assuming the population has not grown, calculate the initial unemployment and labor force participation rates.

Initial Unemployment Rate and Labor Force Participation Rate:

At the beginning of the month, the labor force participation rate is calculated by dividing the labor force (E + U) by the working-age population (E + U + N).

To calculate the unemployment rate, divide the number of unemployed individuals (U) by the labor force (E + U).

At the beginning of the month, the labor force is 120 million + 10 million = 130 million. Therefore, the unemployment rate is 10 million / 130 million = 0.0769 or 7.69%.

Similarly, the working-age population is 120 million + 10 million + 70 million = 200 million, and the labor force participation rate is 130 million / 200 million = 0.6279 or 62.79%.