ECON 112 Lecture 9: Unemployment

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6 Aug 2019
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Chapter 15 - Unemployment
Employed: full or part time workers, those who were not working but who had jobs from which
they were temporarily absent due to illness, vacation, or weather!
Unemployed: those who are not employed but are available for work and have tried to find
employment during the last month; those waiting to be recalled to a job from which they had
been laid off!
Not in the labor force: full time students, homemakers, and retirees!
Labor Force = Number of Employed + Number of Employment
Unemployment Rate = ( Number of Unemployed / Labor Force ) x100
Labor Force Participation Rate = ( Labor Force / Adult Population ) x100!
Natural Rate of Unemployment: the normal rate of unemployment around which the
unemployment rate fluctuates (cyclical unemployment = 0%)!
Cyclical Unemployment: the deviation of unemployment from its natural rate!
Discouraged Workers: unsuccessful in finding a job after a search (want a job)!
Most spells of unemployment are short, but most unemployment observed at any given time is
long-term. Most people who become unemployed will soon find jobs. Most of the economy’s
unemployment probl em is attributable to the relatively few workers who are jobless for long
periods of times. !
Why is there unemployment??
Frictional Unemployment: takes time for workers to search for the jobs that best suit their
tastes and skills!
#* inevitable because the economy is always changing!
#* results of changes in the demand for labor among dierent firms !
# # * sectoral shifts - changes in the composition of demand among industries!
# # * changes in patterns of international trade!
Structural Unemployment: the number of jobs available in some labor markers is insucient
to provide a job for everyone who wants one!
#Job search - the process of matching workers with the appropriate jobs!
Cyclical Unemployment: associated with business cycles (recessions and expansions) !
Public Policy and Job Search
#the faster information spreads about job openings and worker availability, the more
rapidly the economy can match workers and firms!
#** internet!!!
#** government programs — public training programs!
Unemployment Insurance - a government program that increase the amount of frictional
unemployment without intending to do so!
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