A worker quits his job and decides to stay at home catching up on a series on Netflix. What would happen to the unemployment rate?
Question
A worker quits his job and decides to stay at home catching up on a series on Netflix. What would happen to the unemployment rate?
Solution
The unemployment rate would likely increase. Here's why:
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The unemployment rate is calculated by dividing the number of unemployed individuals by all individuals currently in the labor force.
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When the worker quits his job, he becomes unemployed. This increases the number of unemployed individuals.
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However, the worker also leaves the labor force because he is not actively seeking employment. This decreases the number of individuals in the labor force.
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If the decrease in the labor force is less than the increase in unemployment, the unemployment rate will increase. If the decrease in the labor force is greater than the increase in unemployment, the unemployment rate will decrease.
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In this case, it's likely that the decrease in the labor force (one person) is less than the increase in unemployment (one person), so
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