CH 9 (Unemployment)

Natural rate of unemployment

Amount of unemployment the economy normally experiences

Cyclical unemployment

the year-to-year fluctuations in unemployment around the natural rate

How often do good and bad times happen in the economy?

Every 7 to 8 years

A person is employed if…

he or she spent some of the previous week working at a paid job

A person is unemployed if…

he or she is on temporary layoff or is looking for a job

If a person does not fit the employed or unemployed category then…

They are a full-time student, homemaker, or retiree and is not in the labour force

Labour force formula

LF = # of employed + # of unemployed

Unemployment rate

U = # of unemployed / LF * 100

Labour force participation rate

LFPR = LF / Adult pop. * 100

Does a lower unemployment rate = better?

No

• more expensive = more ppl have to work

• does the job pay enough for that region

Discouraged searchers

individuals who would like to work but have given up looking for a job.

Natural unemployment rate

the rate of unemployment to which the economy tends to return in the long run.

▪ The natural rate of unemployment in Canada is between 6 percent to 7 percent.

Frictional unemployment

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

What company did Microsoft discontinue

Skype

Structural unemployment

results when the number of jobs is insufficient for the number of workers

• when people lose jobs due to tech advancements

Efficiency wages

above-equilibrium wages paid by firms in order to increase worker productivity.