Lecture Labour market economics: Chapter 17 - Dwayne Benjamin, Morley Gunderson, Craig Riddell

Chapter 17 - Unemployment: meaning and measurement. The following will be discussed in this chapter: Measurement of unemployment, incidence and duration of unemployment, Canadian unemployment trends, does unemployment rate accurately reflect hardship?

Chapter Seventeen Unemployment: Meaning and Measurement  Created by: Erica Morrill, M.Ed           Fanshawe College © 2002 McGraw­Hill Ryerson Ltd Chapter 17­1 Chapter Focus  Measurement of unemployment  Incidence and duration of unemployment  Canadian unemployment trends  Does unemployment rate accurately reflect hardship? © 2002 McGraw­Hill Ryerson Ltd Chapter 17­2 Measuring Unemployment  Labour Force Survey  Census  Unemployment Insurance Claimants © 2002 McGraw­Hill Ryerson Ltd Chapter 17­3 Canadian Experience  Fluctuated widely between 1921-1996  Due to cyclical fluctuations  Great Depression  World War II  1957-58 © 2002 McGraw­Hill Ryerson Ltd Chapter 17­4 Measurements  Unemployment rate  measure of aggregate of labour market activity and degree of utilization  Labour force participation rate  Ratio of labour force to working age population  Employment  ratio rate of employment to the population © 2002 McGraw­Hill Ryerson Ltd Chapter 17­5 Hidden Unemployment/Marginal Labour Force Attachment  Individuals may not be classified as unemployed  Discourage worker  Workers waiting to be recalled after month layoffs  Individuals working fewer hours than they wish  Temporarily employed © 2002 McGraw­Hill Ryerson Ltd Chapter 17­6 Labour Force Dynamics  Flows between the labour force states are large compared to the stocks  Gross flows are huge compared to net  Many of the unemployed individuals are employed next month © 2002 McGraw­Hill Ryerson Ltd Chapter 17­7 Incidence and Duration of Unemployment  Keys to understanding unemployment  flows between states  stocks in each state  Incidence  portion  Duration  length of unemployment of unemployed at any period of Unemployment of time spent in unemployed state © 2002 McGraw­Hill Ryerson Ltd Chapter 17­8 Changing Perspectives on Unemployment  Understanding unemployment has implications for public policy  Conclusions  lengthy spells of unemployment  employment is not always found  distribution of unemployment © 2002 McGraw­Hill Ryerson Ltd Chapter 17­9 The Divergence of the Canada and U.S Unemployment Rates  Postwar period  Canada’s  Since unemployment rate tracked the U.S 1982  permanent or structural difference may be evident  decline in the incidence of unemployment in U.S  Longer duration of unemployment in Canada Chapter 17­ © 2002 McGraw­Hill Ryerson Ltd 10 Unemployment as a Summary Statistic  Unemployment indicator is an labour market  aggregate state of the economy  tightness/looseness of labour market  extent of hardship  unutilized labour supply  Imperfect and supplemented with additional measures Chapter 17­ © 2002 McGraw­Hill Ryerson Ltd 11 End of Chapter Seventeen © 2002 McGraw-Hill Ryerson Ltd Chapter 17-12 ... © 2002 McGraw­Hill Ryerson Ltd Chapter 17 2 Measuring Unemployment  Labour Force Survey  Census  Unemployment Insurance Claimants © 2002 McGraw­Hill Ryerson Ltd Chapter 17 3 Canadian Experience... 192 1-1 996  Due to cyclical fluctuations  Great Depression  World War II  195 7-5 8 © 2002 McGraw­Hill Ryerson Ltd Chapter 17 4 Measurements  Unemployment rate  measure of aggregate of labour. .. Canada Chapter 17 © 2002 McGraw­Hill Ryerson Ltd 10 Unemployment as a Summary Statistic  Unemployment indicator is an labour market  aggregate state of the economy  tightness/looseness of labour