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Chapter 21

Chapter 21 A.docx

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Department
Economics
Course
ECON 1010
Professor
Sadia Mariam Malik
Semester
Fall

Description
Chapter 21 (Part A) Unemployment Employment and Unemployment The Canadian economy is an incredible job-creating machine. In 2008, 17 million people had jobs, which was 3 million more than in 1998 and 7 million more than in 1978. But not everyone who wants a job can find one. On a typical day, more than 1 million people are unemployed. During a recession, this number rises and during a boom year it falls. At its worst, during the Great Depression, one in every five workers was unemployed. Employment and Unemployment Why Unemployment Is a Problem? Unemployment results in  Lost production and incomes  Lost human capital The loss of income is devastating for those who bear it. Employment benefits create a safety net but don’t fully replace lost wages, and not everyone receives benefits. Prolonged unemployment permanently damages a person’s job prospects by destroying human capital. Employment and Unemployment Labour Force Survey Statistics Canada conducts a monthly population survey to determine the status of the Canadian labour force. The population is divided into two groups: 1. The working-age population—the number of people aged 15 years and older 2. People too young to work (under 15 years of age) Employment and Unemployment The working-age population is divided into two groups: 1. People who are employed 2. People who are unemployed The sum of employed and unemployed workers constitute the labor force. Employment and Unemployment To be counted as employed, a person must have a part time or full time employment. To be counted as unemployed, a person must be in one of the following three categories: 1. Without work but has made specific efforts to find a job within the previous four weeks 2. Waiting to be called back to a job from which he or she has been laid off 3. Waiting to start a new job within 30 days Employment and Unemployment Figure 21.1 shows the labour force categories. Population: 32.9 million Working-age population: 26.6 million Labour force: 17.9 million Employment: 16.9 million Unemployment: 1.0 million Employment and Unemployment Of the 16.9 million employed, … 3.1 million had part-time jobs, … and of these, 0.7 million wanted a full-time job but couldn’t find one. Employment and Unemployment Four Labour Market Indicators  The unemployment rate  The involuntary part-time rate  The employment-to-population ratio  The labour force participation rate Employment and Unemployment The Unemployment Rate The unemployment rate is the percentage of the labour force that is unemployed. The unemployment rate is (Number of people unemployed ÷ labour force)  100. In 2007, the labour force was 17.95 million and 1.08 million were unemployed, so the unemployment rate was 6 percent. The unemployment rate reaches its peaks during recessions. Employment and Unemployment Figure 21.1 shows the unemployment rate: 1960–2008. The unemployment rate increases in a recession. Employment and Unemployment The Involuntary Part-Time Rate The involuntary part-time rate is the percentage of the labour force who work part time but want full- time jobs. The involuntary part-time rate is (Number of involuntary part-time workers ÷ Labour force)  100. In 2007, the 679,000 involuntary part-time workers and the labour force was 17.95 million. The involuntary part-time rate 3.8 percent. Employment and Unemployment The Labour Force Participation Rate The labour force participation rate is the percentage of the working-age population who are members of the labour force. The labour force participation rate is (Labour force ÷ Working-age population)  100. In 2007, the labour force was 17.95 million and the working-age population was 26.55 million. The labour force participation rate was 67.6 percent. Employment and Unemployment The Employment-to-Population Ratio The employment-to-population ratio is the percentage of the working-age population who have jobs. The employment-to-population ratio is (Employment ÷ Working-age population)  100. In 2007, the employment was 16.87 million million and the working-age population was 26.55 million. The employment-to-population ratio was 63.5 percent. Employment and Unemployment Figure 21.3 shows the labour force participation rate and employment-to-population ratio both have upward trends before 1990 and then flatten off after 1990. Unemploymen
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