Labor Market Terms: Employment, Unemployment, and Workforce Dynamics

Employed

- paid employees, self-employed, and unpaid workers in a family business

- full time and part time workers

- sick workers or individuals on vacation

Unemployed

- not employed

- available for work

- attempted to find employment in the last four weeks

Not in the labor force

- not included in the employed or unemployed category

- examples include college students, retirees, and homemakers

Labor Force

employed + unemployed

unemployment rate

unemployed/labor force x 100

labor force participation rate

labor force/adult population x 100

Marginally attached workers

-would like to be employed

- have looked for a job in the recent past

- are not currently looking for work

- not in labor force

discouraged worker

a marginally attached worker who has stopped looking for a job because of repeated failure to find one or job-market related reason

persons employed part time for economic reasons

those who want and are available for full-time work but have had to settle for a part-time schedule

long term unemployment

-most have been unemployed for a long time

- mostly caused by structural unemployment

short term unemployment

- most spells of unemployment are short

- mostly due to frictional unemployment

the unemployment rate can be decomposed into?

the natural rate of unemployment + cyclical unemployment

natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates

cyclical unemployment

the deviation of unemployment from its natural rate

The natural unemployment rate includes

frictional and structural unemployment

frictional unemployment

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.

structural unemployment

results from the labor market institutions that match up workers and firms in the labor market

sectoral shifts

are changes in the composition of demand across industries or regions of the country. jobs are always being created and destroyed

too high wages

create unemployment because lots of people are seeking jobs but firms and aren't demanding that much labor

union

A worker association that bargains with employers over wages, benefits, and working conditions

efficiency wage

an above-equilibrium wage that a firm pays to increase workers' productivity