The following table gives information for June 2006 and June 2007 on the thousands of people who are in the labor force, the thousands of people who are defined as unemployed, and the thousands of people not in the labor force because they believe that no job is available. The latter group consists of those people who are

“discouraged” workers, and some regard them as the hidden unemployed (they have searched for work in the past and are available to work, but they believe jobs are so scarce that looking for work is of no use).

a. Calculate the officially defined unemployment rates for June 2006 and June 2007.
What is the change in the unemployment rate from June 2006 to June 2007?

b. Calculate unofficial unemployment rates that include the hidden unemployed for both dates. What is the change in this unemployment rate from June 2006 to June 2007?

c. If the officially defined unemployment rate is falling, what effect would you expect this to have on the number of discouraged workers? How has the change in the number of discouraged workers affected the change in the officially defined unemployment rate from June 2006 to June 2007?

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Date June 2006 June 2007 Number in Labor Force 152,557 154,252 Number Unemployed 7,341 7,295 Number Discouraged 481 401