Derive the natural rate of unemployment

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Consider an economy with the following characteristics. The size of the lab or force is given by L, and the numb er of employed and unemployed workers is E and U , resp ectively. Supp ose that the job nding rate of unemployed workers is equal to f , and that the job separation rate of employed workers is equal to s. Assume that f and s are b oth exogenous and constant over time. Derive the natural rate of unemployment in this economy, dened as the steady-state rate of unemployment. Based on your answer, what is the impact of a change in the size of the lab or force on the natural rate of unemployment? Why?

Reference no: EM133132549

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