module 22 - unemployment

employed

people who work

• paid employees

• work in their own business

• work as unpaid workers in a family member’s business

• full and part time workers included

unemployment

individuals who are not employed, are available for work, and have tried to find employment during the previous four weeks

not in the labor force

individuals who are neither employed nor unemployed, such as full time students, homemakers, or retirees

adult population

the bls divides the adult population into three categories: employed, unemployed, and not in the labor force

labor force

the total number of workers, both employed and unemployed. calculated as number of employed + number of unemployed

unemployment rate

the percentage of the labor force that is unemployed

• number of unemployed/labor force

labor force participation rate

the percentage of the total adult population that is in the labor force. it represents the fraction of the population that has chosen to participate in the labor market

natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates. it is the level of unemployment that does not go to zero and persists even in the long run

cyclical unemployment

associated with short-run economic fluctuations

• getting laid off

discouraged workers

individuals who would like to work but have given up looking for a job. they are considered marginally attached workers who have given a job market reason for not currently looking for a job

marginally attached workers

persons who are neither working nor looking for work but indicates that tey want and are available for a job and have looked for work sometime in the recent past

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

frictional unemployment

unemployment that results because it takes time for workers to search for jobs that best suit their tastes and skills. it explains relatively short spells of unemployment

sectoral shifts

changes in the composition of demand among industries or regions, which contribute to frictional unemployment

unemployment insurance

government program that partially protects workers’ incomes when they become unemployed. it can increase frictional unemployment by reducing the incentive for unemployed workers to quickly find new jobs

structural unemployment

results because the number of jobs available in some markets is insufficient to provide a job for everyone who wants one. it explains longer spells of unemployment and results when wages are set above equilibrium level

minimum wage laws

government regulations that force wage to remain above the equilibrium price, potentially causing unemployment by increasing the quantity of labor supplied and decreasing the quantity of labor demanded, leading to a surplus of labor

union

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

collective bargaining

the process by which unions and firms agree on the terms of employment

strike

organized withdrawal of labor from a firm by a union, which reduces production, sales, and profit

efficiency wages

above equilibrium wages paid by firms to increase worker productivity. firms might pay this to improve worker health, reduce worker turnover, attract high quality workers, and increase worker effort