Consider now an economy where you need to search for a job. Let b be the function of people that do not have a job and are searching for one. Here active population and working age population do not coincide. Let s be the job separation. We call f the finding rate, conditional on searching for a job
(a) Write the equation describe the dynamics of those employed (E) and those who are not employer (NE)
(b) Compute the employment rate and the unemployment rate in sa Steady State. Explain how they are affected by the search rebate b
(c) Suppose that the Woking age population is 600 people, and that the finding rate is 5%, the separation rate is 2% and the search rate b is 10%. What is the unemployment rate?
(d) What is the number of employed and unemployed people in this economy?
(e) Suppose now that the search rate were 90%. What is now the employment and unemployment rate in this economy?