Assignment two: Labor Market Goals: Learn about the labor force participation rate and unemployment through time Expand upon our graph-making capabilities and learn about new sources of data online...

Assignment two: Labor Market

Goals:

• Learn about the labor force participation rate and unemployment through time
• Expand upon our graph-making capabilities and learn about new sources of data online

Labor force participation rate is a measure of an economy's workforce.

• LFPR=labor force/adult population -->breaking down the different parts of this fraction:

LFPR = employed + sought employment within the last four weeks / the totalnoninstitutionalizedcivilian working-age population

LFPR will vary over time due to not only economic reasons, but also demographic and social trends as well.

To find the data we'll be using the St. Louis FederalReserve's"FRED" website (FRED stands for Federal Reserve Economic Data). This website offers a range of different datasets that are aggregated from other sources such as the Bureau of Labor Statistics (BLS).

https://fred.stlouisfed.org/

To find the civilian labor force participation rate use CIVPART in search bar.On the FRED website click Edit Graph and Modify frequency to annual instead of monthly.Download the data as an .xlsfile. We have the civilian LFPR from 1948 to present day in a an annual format.

Make chart:

• LFPR 1948-Present

1) When was the LFPR the highest? When was it the lowest?

Make chart:

• LFPR 1990-Present

2) When was it the highest in the last 30 years? When was it the lowest in the last 30 years?

3) Determine the impact on thelabor force participation rateif two million formerly unemployed workers decide to return to school full-time and stop looking for work.

4) Determine the impact on thesize of the labor forceif two million formerly unemployed workers decide to return to school full-time and stop looking for work.

5) Determine the impacton the unemployment rateif two million formerly unemployed workers decide to return to school full-time and stop looking for work.

6) The labor force in the US has 164.6 million people in it. Of those, 158.7 million are employed. How many in the labor force are unemployed? What is the unemployment rategiven these numbers? (SHOW MATH TO GET CREDIT)

Now let’s look at the unemployment rate.Search UNRATE on FRED for unemployment and change to annual againàdownload 1948-present. This gives unemployment data monthly, which matches with the same time-series charts for the LFPR. Copy and paste the unemployment data next to the CIV LFPR data to match up.

7) When was unemployment the highest? What about lowest?

8) What was the CIV LFPR in these years? What does it mean to have a low unemployment rate if the LFPR is low as well? Think about what each one of these variables mean on their own and then together.

Make graphs:

• UNRATE 1948-present
• UNRATE 1990-present

Search for U6RATE on FRED. This will give you the U6 unemployment rate, which includes the unemployed plus those that are marginally attached plus those who are underemployed. The data only goes from 1994, so copy and paste in the original Excel sheet accordingly after adjusting to annual again.

Make a graph “U3 vs U6” and add a legend that denotes which line is U3 and which is U6

9) What happens when we consider the U6 rate in contrast to the U3 rate? Why might this be a better measure of unemployment?

10) Describe the relationship between U3 and U6 from the 90s to our present day.