Topic 8- Unemployment and its Natural Rate Flashcards
What is the working age population
people who are 15+ and LEGALLY ENTITLED TO WORK IN CANADA!!!!!!!!!!!1
Employed
Anyone who works a job (part time or full time)
Unemployed
People who are willing and able to work, looking for work, but can not find work
THEY HAVE LOOKED FOR WORK IN THE LAST 4 WEEKS
Labour force
Employed+Unemployed
Who is not in the labour force
people who are not looking for work,
UNABLE AND UNWILLING TO WORK
What is the unemplyment rate?
% of workforce that is unemployed
RATE= (Number of unemployed/Labour force) x 100
Is the unemployment rate perfect?
why does it understate
-discoruaged workers are counted as not part of the labour force (they are willing and able butGIVE UP LOOKING FOR WORK)
-emmployed is FULL TIME OR PART TIME, so technically if youre looking for a full time job while working part time youre not unemployed
DISCOURAGED WORKERS
workers who are willing and able to work but they can not find work SO THEY GIVE UP (counted as not part of the labour force)
why does unemployment rate not accurate? OVERSTATES
-people might lie saying they looking for work so they get EI (they are not part of labour force)
- people might be employed but illegally/say theyre not to get out of taxes (they are part of of the labour force)
Labour force particiapation rate
the % of the working age population that is in the labour force
LABOUR FORCE/WORKING AGE POP x 100
What are two groups in working age pop
in labour force
outside labour force
Employment population ratio
% of the working age pop that is employed
Employ ratio = # employed/ working age pop x 100
Types of unemployment
frictional
structural
cyclical
seasonal
frictional unemployment
short term that arises from the process of mathcing workers with jos
THIS IS IN THE MIDDLE OF JOB SEARCH!
Structural unemployment
unemployment from persistent mismatch between the skills and attributes of workers and the requirements of jobs
LONG PERIOD UNEMPLOYMENT
they are frequently forced to recieve training in new areas before they can find a new job
when does structiral unemploy occur
when demand for a specific kind of skill falls
when oil workers lose jobs
cylical unemplyment
unemply bc business cycle recession! drop in aggregate demand for almost all products!!
Workers whose firms laid them off due to low sales during recession
Seasonal unemployment
unemoplyment due to seasons, like farm work/ or fluctuating demadn for work
what is the natural rate of unemply
people are always entering or reentering the labour force between jobs!!!!
IT IS NEVER 0, it is the sum of FRICTIONAL AND STRUCTURAL UNEMPLOYMENT
NATURAL RATE UNEMPLOY FORMULA
FRICTIONAL UNEMPLOY+STRUCURAL UNEMPLOY
when all unemploy is due to frictional and structural?
IT IS CALLED FULL EMPLOYMENT
what is full employment gdp
refered to as potential GDP
how can govt decrease frictional unemploymnet
pursue policies that speed up the process of matching employees w employers
how can govt decrease structural unemploy
provide govt training programs to the structurally unemplyed!
pay subsidied to firms that provide trianing to displaced workers
how can govt decrease cyclical unemploy
EXPANSIONARY FISCAL POLICY to increase output thorugh increasing govt spending and decreasing taxes
using expansinosry monetary polucy to increase output thorugh cutting interest rates
what can govt do to solve seasonal unemploy
create jobs in off season
what govt policies in crease the unemploy rate
EI
EI BENEFITS!!
gives benefits to newly job loss workers (lost job bc no perosnla fault) paid 55% earnign fro 45 weeks max
what govt policies in crease the unemploy rate/increase the min wage
ei
min wage
union
efficiency wages
Min wage laws effect on unemploy rate
min wage IS LOWEST WAGE employer can pay an employee!!
raising the min wage creates more supply of labour then demadn- UNEMPLOYMENT
Labour Union, effect on unemploy rate
orgs of workers that bargain w employees for higher wages and better working conditions for members
Unionized industries have jhigher wages and better working confitons-? result in less people hired
what happens when supply of labour >demand of labour
UNEMPLOYMENT
Efficiency Wages, effect on unemployment
many firms pay wages that Are HIGHER ! because the employees morale and commitment essentaily to work quality!!!!!!
what does lower unemployment do
IDK THIS BRO WTF
lower unemployment makes it more attractive for employed woreks to quit
lower unemploy leads to high er wages
when unemply rate is increased, then the
min wage is higher!!!!!!!
When you retire do you leave workig age pop
NO! ALWAYS IN IT IF U ARE +15
