low unemployment (macro)

unemployment

the number of working age people and non-institutionalized people actively seeking jobs

unemployment formula

unemployed/labor force * 100

underemployment

- workers working part time seeking additional work
- workers employed below their skill level or are overqualified for their jobs

hidden employment

- discouraged workers or workers who have stopped seeking jobs
- black market or underground market workers

consequences of unemployment

- loss of real output or gdp
- loss of government revenue (transfer payments)
- increase in income inequality
- increase in crime rates
- stress
- indebtedness
- homelessness

cyclical unemployment

unemployment occurring during economic downturns or during recessionary gaps

natural rate of unemployment

the rate of unemployment when the economy is producing at it's full capacity
includes
- frictional unemployment (unemployment found when people are shifting between jobs)
- structural unemployment (when there is a difference in the demand for labor and supply for labor)
- seasons (based on the type of work)

policies for cyclical unemployment

to correct the recessionary gap
- expansionary fiscal policy (increasing government expenditure and reducing taxes)
- expansionary monetary policy (increasing money supply and decreasing interest rates)

frictional unemployment + seasonal unemployment

to increase total output level and reduced the time spent unemployed
- interventionist policies (human capital, labor, technology, infrastructure, industries)

structural unemployment

aims to 1. change the demand for skills; 2. change in the geography of labor; and 3. reduce labor market rigidities
- interventionist policies (training, grants, subsidies)
- market based (reducing wages, benefits, and protections)