Discouraged searchers and underemployed workers
By keeping track of discouraged workers and underemployed workers, Statistics Canada gets a
clearer picture of the true employment situation than if it looked at only the number of
unemployed workers.
Which of the following statements correctly describediscouraged searchers?Check all that
apply.
They are full-time workers who would like to work only part-time.
They arenotin the labour force.
They are available for work.
They havenotlooked for work during the past four weeks.
Points:
0.75 / 1
Close Explanation
Explanation:
Statistics Canada defines discouraged searchers as people who want to work and are available to
work but who are not looking for work because they believe no suitable work is available. Because
they are not looking for work, they are not included in the labour force.
Consider a hypothetical economy in which the labour force consists of 100 people. Of those, 85
people are employed full-time and 15 people are unemployed. The government of this economy
follows the same conventions as Statistics Canada in computing its employment figures. The
unemployment rate is simply the number of unemployed people divided by the number of people
in the labour force. Initially, then, the unemployment rate is (15/100) x 100% = 15.0%.
Suppose a reduction in foreign demand for this economy's products causes an economic recession
—a prolonged period of declining output. The following table offers two different possible scenarios
resulting from the recession. Calculate the unemployment rate associated with each scenario.
Unemployment
Rate
Scenario
A:
Firms reduce work hours by 25%. The number of
underemployed workers rises as firms respond to the
reduction in the demand for their products by reducing
the hours of each employed person from 40 to 30 hours
per week.
15.0%
Scenario
B:
Firms reduce employment by 25%. The number of
unemployed workers rises as firms respond to the
reduction in the demand for their products by laying off
21 previously employed workers.
36.0%
