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Chapter 21

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Department
Economics
Course
Economics 1022A/B
Professor
Desmond Mc Keon
Semester
Winter

Description
Chapter 21 21.1- Unemployment results in: -lost incomes and production and lost human capital The population is divided into two groups: 1. The working-age population- there number of people aged 15 years and older who are not in institutional care 2. People too young to work (under 15 years of age) or in institutional care And the working age population is divided into two groups: 1. People in the labor force 2. People not in the labor force -the labour force is the sum of employed and unemployed workers -a marginally attached worker is a person who currently is neither working nor looking for work but has indicated that he or she wants a job and is available and has looked for work sometime in the recent past -to be counted as unemployed, a person must be available for work and must be in one of three categories: 1. Without work but has made specific efforts to find a job within the previous four weeks 2. Laid off from a job and waiting to be called back to work 3. Waiting to start a new job within four weeks The unemployment rate is the percentage of the labour force that is unemployed -(# of people unemployed/labour force) x100 The involuntary part-time rate is the percentage of the labour force who work part time but want full-time jobs -(# of involuntary part-time workers/labour force) x100 The labour force participation rate is the percentage of the working-age population who are members of the labour force -(labour force/working-age population) x100 21.2- -frictional unemployment is unemployment that arises from normal labour market turnover (creation and destruction of jobs requires that unemployed workers search for new jobs) -structural unemployment is unemployment created by changes in technology and foreign competition that change the skills needed to perform jobs or the locations of jobs -cyclical unemployment is higher than normal unemployment at a business cycle trough and lower than normal unemployment at a business cycle peak (firing during recession, hiring back after) -“natural” unemployment is the unemployment that arises from frictions and structural change when there is no cyclical unemployment (all frictional and structural unemployment) -full employment is defined as the situation in which the unemployment rate equals the natural unemployment rate (no cyclical unemployment) -potent
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