Module 6 Reading Flashcards
what kind of measurement is the unemployment rate
- a measure of the overall state of the economy and the degree of tightness or slack in the labour market
- tightness = excess demand
- slack = excess supply
who are the unemployed generally defined as
those who are not currently employed, are available for work, and indicate by their behaviour that they want to work at good wages and working conditions
where is most of the data on unemployment in Canada
- the labour force survey (LFS)
- carried out monthly by statistics Canada
how does LFS consider people unemployed
if they didn’t have work in the reference period, but were available and searching for work
what are two other ways people can be considered unemployed
- those who were available but didn’t search for work because they got a temporary layoff from a job to which they expect to be recalled
- those with a job to start within the next four weeks
what does it mean to be classified as unemployed
that there was some sort of job searching done, like contacting employers or checking job ads
how does LFS define job search
having looked for work sometime during the previous 4 weeks
who are considered out of the labour force
- those who are not employed and not seeking work
- like students, stay-at-home individuals, those permanently unable to work, and the retired
what is considered employed
those who did any sort of work for pay or profit, including unpaid work on a family farm or business, or if they had a job but couldn’t work because of things like bad weather, illness, industrial dispute, or vacation
how much did the great depression change the unemployment rate
from about 3% to almost 20%
what happened to unemployment during WWII
unemployment fell to very low levels
what was the trends of unemployment during the post WWII period
- cyclical variations around a general upward trend until the 1980s
- then a modest downward trend after
what is unemployment rate
most commonly used labour market activity and the degree of labour force utilization
what are the 2 additional measures of unemployment rate
- employment rate
- labour force participation rate
what is the employment rate
the ratio of employment to the source population (rate of those in the labour force that are employed)
what is the labour force participation rate
the ratio of the labour force to the population of working age, or source population
do the 3 measures of unemployment always move together? why or why not
- no they don’t
- because they focus on somewhat different aspects of labour market activity
- ex. since the mid-1960s, the unemployment rate has risen substantially but the labour force participation rate and employment rate have risen, not fallen
what does the measurement of unemployment raise
difficult and controversial issues
what is hidden unemployment
- also known as marginal labour force attachment
- when individuals may be without work, desire work, yet they are not officially classified as unemployed because they are not searching for work
- can be when they are attached to the labour force to some degree but not enough to look for work
what are examples of hidden unemployment
- discouraged workers; those who only want to work when the wages are good, or those who don’t seek work because they think no work is available
- those who are waiting for potential or promised jobs to become available, like waiting for a recall for more than 6 months
- underemployment; working less hours than they usually do or want to
- those temporarily in jobs they that doesn’t use their skills or training
what is the major lesson about the unemployment rate
that its not that the official unemployment rate is a poor measure, but its no single measure of unemployment is likely to be suitable for all purposes
what is the labour market like
highly dynamic
what are the 3 labour force states
- employment
- unemployment
- out of the labour force
what are the gross flows between the 3 labour force states like
- large in comparison to the stocks in each state at any point in time
- huge in comparison to the net flows
what does unemployment not mostly consist of
individuals who lost their job, either temporarily or permanently
how much of job losers account for the flows into unemployment and when is it the highest
- about 35-45%
- the proportion is highest in recessions
what is the rest of unemployment made up of if they are not all job losers
- job leavers (about 10%)
- new entrants and re-entrants (40-45%)
what are 2 useful concepts for understanding unemployment dynamics
- incidence
- duration of unemployment
what is incidence of unemployment (for any group of workers)
the probability of a member of the group becoming unemployed
what is duration of unemployment (for any group of workers)
measures the length of time the individual can expect to remain unemployed on average (before they become employed or leave the labour force)
what can the unemployment rate be expressed as in a steady state
incidence x duration
what is the comparison of unemployment rates and duration of unemployment between young workers and adults
- Young workers have much higher unemployment rates than adults
- but lower average duration of unemployment
what is the cause of high youth unemployment rates
due to the high probability of becoming unemployed in any period
what is the cause of low adult unemployment rates
Older workers become unemployed less frequently, but experience longer unemployment spells once they become unemployed
what happened to the view of the unemployed during the 1970s
the traditional view was challenged by a “new view”
what was the traditional view of the unemployed
the unemployed were regarded as a mainly unchanging stock of individuals without work for a lengthy period
what was the new view of the unemployed
it emphasized the importance of employment stability and turnover in the labour market
what did research change about the new “turnover” view
- they noted that although the average duration of unemployment is fairly short, much of total unemployment is still accounted for by those experiencing repeated and/or long spells of joblessness
- many unemployment spells also end in labour force withdrawal rather than in employment, suggesting that unavailability of suitable employment is a reality for some workers
why is the unemployment rate unwise to be relied on alone
because it is widely used as an indicator of the amount of unutilized labour supply, the state of the labour market and economy, and the degree of hardship in the population
