Unemployment - Chapter 8

Flashcards covering key definitions and concepts related to unemployment, its measurement, types, and patterns, based on Chapter 8 of the lecture notes.

Employed

Individuals currently working for pay.

Unemployed

Individuals who are out of work and actively looking for a job.

Out of the labor force

Individuals who are not working and not looking for work, whether they want employment or not.

Labor force

The total number of employed individuals plus the number of unemployed individuals.

Unemployment rate

The percentage of adults who are in the labor force and seeking jobs, but who do not have jobs. Calculated as (Unemployed people / Total labor force) x 100.

Hidden unemployment

Encompasses part-time or temporary workers seeking full-time work, underemployed individuals, and discouraged workers.

Underemployed

Individuals who are employed in a job that is lower paying than or doesn’t utilize their skills.

Discouraged workers

Those who have stopped looking for employment due to the lack of suitable positions available.

Labor force participation rate

The percentage of adults in an economy who are either employed or who are unemployed and looking for a job. Calculated as (Total labor force / Total adult population) x 100.

U.S. Bureau of Labor Statistics (BLS)

The government agency responsible for collecting and analyzing labor market data in the U.S.

Establishment Payroll Survey (EPS)

A monthly survey of businesses and government agencies used to estimate the number of jobs created.

Current Population Survey (CPS)

A monthly survey of households used to estimate the number of employed, unemployed, and out of the labor force, as well as other detailed labor market information.

Cyclical unemployment

Unemployment closely tied to the business cycle, typically increasing during a recession.

Frictional unemployment

Unemployment that occurs as workers transition between jobs, often considered a natural part of a healthy labor market.

Structural unemployment

Unemployment that occurs because individuals lack skills valued by employers, often due to technological advancements or changes in industry competition.

Natural rate of unemployment

The rate of unemployment caused by structural and frictional forces in the economy, where cyclical unemployment is zero. It is the lowest sustainable rate of unemployment.

Full employment

A state in the economy when the actual unemployment rate is equal to the natural unemployment rate.

Potential real GDP

The level of real GDP produced when the economy is operating at full employment.