Textbook Notes (368,317)
Canada (161,798)
Economics (924)
ECN 204 (282)
Eric Kam (28)
Chapter 9

Chapter 9 - Unemployment & Its Natural Rate

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ECN 204
Eric Kam

thWednesday March 7 2012 Chapter 9 Unemployment and Its Natural Rate Identifying Unemployment Produced by Statistics Canada Based on regular survey of 50000 householdsLabour Force Survey Based on adult population 15 yrs or older BSL also produces the CLP statisticsLabour Force Statistics Statistics Canada divides population into 3 groups 1 EmployedA person is considered employed if he or she has spent most of the previous week working at a paid job 2 UnemployedA person is unemployed if he or she is on temporary layoff is looking for a job or is waiting for the start date of a new job 3 Not in the labour forceeveryone else The labour force is the totalof workers including the employed and unemployed unemployment rate aka urate unemployment rate urateof the labour force that is unemployed urate100 xof unemploymentlabour force labour force participation rateof the adult population that is in the labour forcelabour force population100 x labour forceadult populationDoes the Unemployment Rate Measure What We Want It To It is difficult to distinguish between a person who is unemployed and a person who is not in the labour force Discouraged searchers people who would like to work but have given up looking for jobs after an unsuccessful search dont show up in unemployment statistics Other people may claim to be unemployed in order to receive financial assistance even though they arent looking for work people may misreport their labour market status to Statistics Canada perhaps because they think it will help them get public assistanceThis also makes the unemployment rate a bit less accurateGDP is an imperfect indicator of societys wellbeing and the CPI tends to overstate increases in the cost of living yet unemployment rate remains highly usefulFor example when the unemployment rate rises it is almost always true that things are getting worse in the labour marketWhy Are There Always Some People Unemployed Theres always some unemployment though the urate fluctuates from year to year Natural rate of unemployment the rate of unemployment to which the economy tends to return in the long run in Canada it is estimated that the natural rate of unemployment is currently between 6 and 8 percent unemployment is a serious and complicated problem with a variety of cause to most effectively address such a problem we need to break it down and look at each cause separately we begin by noting that the causes of shortrun fluctuations in unemployment are different than the causes of the longrun average unemployment rate called the natural rate of unemployment
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