[Related to the Apply the Concept on page 286] In discussing the labor market during the recovery from the 2007–
2009 recession, Federal Reserve Chair Janet Yellen noted
that “the employment-to-population ratio has increased far
less over the past several years than the unemployment rate
alone would indicate, based on past experience.”
a. During an economic expansion, why would we normally expect the employment–population ratio to increase as the unemployment rate falls?
b. Why didn’t the employment–population ratio increase
as much as might have been expected during the
recovery from the 2007–2009 recession?
Source: Janet L. Yellen, “Labor Market Dynamics and Monetary
Policy,” Speech at the Federal Reserve Bank of Kansas City Economic
Symposium, Jackson Hole, Wyoming, August 22, 2014.