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Macroecnomics

Question:

Explain what is meant by the statement, “One factor keeping the jobless rate from falling more rapidly is Australia’s participation rate which edged up…”, by highlighting the connection between jobs growth, participation rate and unemployment rate.

Answer

Job growth is a statistical measurement through which the government of any country can track creation of new jobs on a monthly basis (Adelino, Ma and Robinson 2017). Hence, this figure measures economic expansion of the country and consequently represents health of the national economy. Labour force participation rate, on the other side, measures the proportion of working-age population, which actively engages within a country’s labour market. They can be engaged through working or seeking for a job (Elsby, Hobijn and ?ahin 2015). Thus, participation rate gives the indication of available supply of labour compare to the working age population for producing goods and services. Hence, this rate provides the distribution of the total working force of a country. The unemployment rate is another concept related with labour market. This rate represents the share of total labour force, which is jobless, in terms of percentage. This rate is considered as a lagging indicator, which implies measurable economic factor. This factor changes when the economy starts to follow a specific trend (Theut Riis, Thorlacius, Knudsen List and Jemec 2017). Thus, this unemployment rate rise when the economy experiences poor conditions and jobs become scarce. On the contrary, if the economy follows a healthy rate as well as huge number of jobs, then this rate could be decreased. In this context, it can be mentioned that labour force participation rate and unemployment rate has opposite relation. Thus, these three indicators has close link through which labour market of Australia can be described. Through job growth, the economy can increase its labour force participation rate in job market. This in turn can reduce the unemployment rate and represent a healthy labour market (Mokyr, Vickers and Ziebarth 2015). Thus, according to the given scenario, more jobs are need to create for reducing the unemployment rate.

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