Question

13. Compare Country Alpha with Country Omega. Which country would you expect to have a higher unemployment rate in each of the following situations? a Alpha has a larger share of its population under age 25; Omega has a larger share of its population between the ages of 25–54, men or women. b. Residents of Alpha tend to have a higher education level than residents of Omega. C. Alpha recently had an unexpected surge of labor productivity. d. Residents of Omega are happy to move around the country for jobs, but residents of Alpha prefer to stay put. e. Alpha and Omega have in the past provided unemployment benefits for an unlimited amount of time, but now Alpha sets a six-month limit for receiving such benefits.

Answer 1

a. If Alpha has a larger share of its population under age 25, but Omega has a large share of population between the age 25-54, then according to me there must be higher unemployment rate in Alpha as youths between 16-24 find it difficult to find jobs as most of them are in their schools and people of age group 25-54 are experienced professionals so most of them have jobs already and are settled.

b. In this case education level of the residents of Alpha are higher then those of the Omega so the residents of alpha can find jobs easily while it will be a bit difficult for the residents of Omega to get a job. So the unemployment rate in Omega will be higher.

c. If there is a sudden increase in the labour productivity in Alpha it may be both good as well as bad, good in the sense that every employer wants high productive labour and bad in the sense that large amount of work can be done by a less number of people so less people will get employment. But at the end it is easier for a higher productive labour to get a job, so unemployment rate in Omega will be higher.

d. If residents of Omega are happy to move around the country for work, so it will be easier for them to find jobs. But if residents of Alpha are not willing to move around, it will be harder to get a job and the unemployment rate among them will be higher.

e. If Alpha sets a six month duration for receiving unemployment benefits which is still unlimited in Omega then the residents of Alpha will try to get jobs as fast as possible and hence the unemployment rate in Omega will be higher.