ECON 2400 Lecture 23: Lesson 23
20 Apr 2017
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Document Summary
The labor market variables we focus on here are those measured in the monthly household survey, carried out by the bureau of labor statistics. Thus, the labor force is the employed plus the unemployed. The unemployment rate is a useful economic measure for at least two reasons. First, it helps determine the level of labor market tightness, which captures the degree of difficulty firms face in hiring workers, and the ease with which would-be workers can find a job. Second, the unemployment rate can be used as an indirect measure of economic welfare. While gdp per capita is a reasonable measure of aggregate economic welfare for a nation, the unemployment rate gives us some information on the distribution of income across the population. In spite of the existence of unemployment insurance programs in many countries, unemployment is not perfectly insured, and so income tends to be low for the unemployed.
