ECON 401 Lecture Notes - Lecture 8: Full Employment, Business Cycle, Efficiency Wage
Document Summary
How to calculate the unemployment rate: based on the household survey, the labor force = employed + unemployed: Employed: if they worked during the previous week or justified absence; Unemployed: if they did not work, but available and looking for a job: unemployment rate= (number of unemployed / labor force)*100. How to calculate the labor force participation rate: people are not in the labor force because not available or not looking for a job: Not available: retirees, full-time students, or homemakers; Not looking for a job: discouraged workers or other problems: labor force participation rate= (labor force / working-age population)*100. Frictional: caused by the process of matching workers with jobs (short-term): Examples: between jobs or in the process of searching for new ones; Efficient: a good match between workers" attributes and jobs" requirements. Structural: caused by persistent mismatch between job skills and jobs (long-term): Examples: a worker find a job in another industry after a lengthy retraining;
