Institute of International Education 2 4 Unemployment ▪ Unemployment is considered as an indicator of economic well being ▪ When a country keeps its workers as fully employed as possible, it achieves[.]
2.4 Unemployment ▪ Unemployment is considered as an indicator of economic well-being ▪ When a country keeps its workers as fully employed as possible, it achieves a higher level of GDP than it would if it left many of its workers idle Institute of International Education Population breakdown Population Out of working-age In working-age Labor force Employment Institute of International Education Unemployment Out of labor force Labor Force Statistics ▪ Employed: paid employees, self-employed, and unpaid workers in a family business ▪ Unemployed: who are without work but available for and seeking employment ▪ Not in the labor force: everyone else, such as children, students, retirees… The labor force is the total number of workers, including the employed and unemployed Institute of International Education Labor Force Statistics Unemployment rate (“u-rate”): % of the labor force that is unemployed u-rate No of unemployed = 100 x labor force Labor force participation rate: % of the adult population that is in the labor force labor force labor force = 100 x participation rate adult population Institute of International Education Cyclical Unemployment vs the Natural Rate Natural rate of unemployment ▪ is the rate of unemployment that the economy experiences even during normal times - Frictional unemployment: occurs when workers spend time searching for the jobs that best suit their skills and tastes - Structural unemployment: results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one Institute of International Education Cyclical Unemployment vs the Natural Rate Cyclical unemployment ▪ the deviation of actual unemployment from its natural rate ▪ refers to the additional unemployment that occurs during recessions Institute of International Education ACTIVE LEARNING Calculate labor force statistics Compute the labor force, u-rate, adult population, and labor force participation rate using this data: # of employed 145.9 million # of unemployed 8.5 million not in labor force 79.2 million Institute of International Education ... Education Cyclical Unemployment vs the Natural Rate Natural rate of unemployment ▪ is the rate of unemployment that the economy experiences even during normal times - Frictional unemployment: occurs... Cyclical Unemployment vs the Natural Rate Cyclical unemployment ▪ the deviation of actual unemployment from its natural rate ▪ refers to the additional unemployment that occurs during recessions Institute... Structural unemployment: results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one Institute of International Education Cyclical Unemployment