ECON 102 Lecture Notes - Lecture 9: Frictional Unemployment, Domestic Violence, Structural Unemployment

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John lost his job 3 months ago at general motors (gm) after working there for 15 years: he is now without a job. He did look for work since he lost his job at gm. Truman: this famous quote gives us insight into the pain associated with being unemployed, as a result of loss of income, families start making difficult trade-offs involving health, education, nutrition. Potential workers: everyone in the general population except, children under 16 years, active military personnel. The unemployment rate = 100% x (unemployed/labour force) The labor force participation rate = 100% x (labor force/potential workers) In the us in 2016: the unemployment rate = 100% x (7. 7/159. 1) = 4. 8% Labor force participation rate = 100% x (159. 1/253. 5) = 62. 7% Question: what happens to the unemployment rate during the following situations, a recession, when firm tend to fire workers, an expansion, when firms tend to hire workers, a (cid:862)(cid:374)or(cid:373)al period(cid:863) (cid:449)he(cid:374) fir(cid:373)s do (cid:374)either.

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