2.3 : Unemployment Flashcards
Unemployment
Workers that are actively looking for a job
The Unemployment Rate
the % of people in the labor fore who want a job, but aren’t working
UR = # unemployed/ # in labor force x 100
Who is in the labor force?
At least 16 yrs old
Able & willing to work
Not institutionalized ( in jail or hospital).
Not in military, school full time, or retired
Frictional Unemployment
Temporary unemployment or b/tw jobs
Individuals are qualified workers w/ transferable skills
Ex: High/College graduates looking for a jobs, people fired/ looking for better job
Seasonal Unemployment
Type of frictional unemployment, due to time of year & nature of job
Structural Unemployment
Changes in labor force make some skills obsolete
Workers don’t have transferable skills & these jobs will never comeback
Workers must learn new skills to get a job
Creative Destruction
permanent loss of structural jobs
Ex: Milkman
Technological Unemployment
Type of structural unemployment where automation & machinery replace workers
Cyclical Unemployment
Unemployment caused by a recession
As demand for goods & services falls, demand for labor falls & workers are laid off.
Ex: Steel Workers laid off during recession
What is cyclical unemployment sometimes called?
Demand deficient unemployment
Natural Rate of Unemployment (NRU)
Frictional & Structural employment. Amount of unemployment that exists when the economy is healthy & growing
Full Employment Output (Y)
The Real GDP created when there is no cyclical employment
US is at full employment when there is 4-6% unemployment
Natural Rate of Unemployment (NRU) v. Non-Accelerating Inflation Rate of Unemployment (NAIRU)
Both represent the idea of full unemployment
-NRU focuses on output & not having too much unemployment
NAIRU focuses on inflation & not having too unemployment
Too little unemployment can cause prices to rise, since consumers spend more & producers bid up price of resources
A low unemployment that doesn’t cause higher prices is considered “non-accelerating”
Discouraged Workers
Some people are no longer looking for a job b/c they have given up
Criticism of UR
Labor Force Participation Rate
LFPR= labor force/ population x 100
% of population in LF. If people leave the labor force UR drops
Criticism of UR
Underemployed Workers
Some people want more hours, but can’t get them is still considered employed
Criticism of UR
Race/Age inequality
Overall UR doesn’t show disparity for minorities & teens
