What is the equilibrium unemployment rate

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Reference no: EM131090360

Suppose that there is a fixed number of workers.

Each worker is at a certain instance either employed or unemployed.

The average duration of a period of unemployment is Du=10 months, and the average duration of a period of employment is De = 40 months.

Use the model of labor market flows between these two states to answer the following questions.

1) What is (in rate per month) the rate of job finding (f) ?

2) What is the rate of job separation (s) ?

3) What is the equilibrium unemployment rate (u) ?

The answers are as followed

1) 0.1

2) 0.025

3) 20%

Could you give me how to solve with a fomular?

Reference no: EM131090360

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