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
