ECON102 Lecture Notes - Lecture 3: Real Wages, Unemployment, Potential Output
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Lost income and production: unemployment benefits create safety net , but don’t fully replace lost earnings.
Lost human capital : damages persons prospects by destroying human capital and lowers standard of living.
In Canada, we have unemployment benefits create a safety net but don’t replace lost wages and not everyone
Working age population are the no. of people ages 15 years and older who are not in institutional
care ( jail, mental hospital).
People too young to work ( under 15 years of age) or in institutional care.
By the labor force survey conducted by Canada Statistics. It askes 54,000 households.
Rate in Canada are 7.1%
Working age population is divided in to labor force and no-labor force. Labor force is divided into
employed and unemployed.
Employed : you must have a full-time/part-time job and have a paid position. Not volunteers.
no job but made efforts to find a job within the previous 4 weeks
waiting to be called back by which he /she has been laid off
waiting to start a job in four weeks.
Persons younger than 15 years old,
Persons residing in the Yukon, the Northwest territories, Nunavut, and aboriginal settlements,
Full-time members of the armed forces. Because the target population is civilians only.
Inmates in institutions.
The labor force survey deliberately excludes individuals in all of the following categories:
(# of people unemployed / labor force) * 100
Homeless people are not captured
We estimate between 6-8% of labor force will be unemployed overtime.
The unemployment rate
(labor force/ working age population)*100
Working age population who are members of the labor force.
The labor force participation rate.
Labor market indicators
Marginally attached workers are discouraged searchers : neither working nor looking for
Long-term future starts: with a job to start in more than four weeks
Is an imperfect measure because it excludes :
Other definitions of unemployment
Part-time workers who want full time jobs are employed.
Concerned with the duration of unemployment.
Most costly unemployment: is the long-term unemployment
Frictions unemployment : rises from normal labor market turnover. Flow in and out of
the labor force and the process of job creation and job destruction.
Structural employment : changes in technology and international competition
Unemployment can classified into three types
Measuring of unemployment :
Unemployment :resource that is being wasted. That is sitting idle.
Ch21 : Monitoring jobs and inflation
Wednesday, January 6, 2016
ECON102 Page 1