EC140 Lecture Notes - Lecture 30: Stagflation, Disinflation, Supply Shock
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EC140 Full Course Notes
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Document Summary
Increases in employment on average match increases in the labour force in the long run. Changes in unemployment depend on output gaps in the short run. People move from employment to unemployment or between jobs very frequently: stable employment data hides considerable labour force movements. Unemployment rates depend on the fraction of the labour force that does not have a job. Discouraged workers are those that have stopped looking and not captured in the data. Underemployment is not generally captured: part time work when would prefer full time work, working requiring skills much lower than a previous job, these people generally keep searching for work. Lost output: permanent cost of output that is not produced. Personal costs: 7 to 12 percent of unemployed workers are unemployed for 12 months or longer, long term unemployment may lead to declines in labour productivity. Personal costs are difficult to measure but may be larger than the output costs.
