Unemployment

Unemployment

The number of people unemployed.

Unemployment Rate

The percentage of the labor force that is unemployed.

Labor Force

The sum of employed and not employed workers in the economy.

How is the unemployment rate calculated?

By measuring the labor force and the number of people unemployed.

Who are considered not in the labor force?

Retirees, homemakers, full-time students, people on active military service, and people in prison or mental institutions.

Who is considered a discouraged worker?

Someone who is available for work and has actively looked for a job during the last 12 months but not during the last 4 weeks.

What is a problem with measuring unemployment?

Not counting discouraged and part-time workers as fully or partly unemployed.

What are the costs of going to college?

Student loans and college years of no or little income.

What is a benefit of going to college?

The unemployment rate for college graduates is much lower than that for those with only a high school diploma.

What are the individual level problems with unemployment?

Loss of income, loss of health, depression, loss of identity, loss of skills.

What is Frictional Unemployment?

Short-term unemployment that arises from the process of matching workers with jobs.

What is Structural Unemployment?

Unemployment arising from a persistent mismatch between the skills of workers and the requirements of jobs.

What is Cyclical Unemployment?

Unemployment caused by a business cycle recession.

What does full employment indicate?

It means we only have natural unemployment.

What is the natural rate of unemployment?

The normal rate of unemployment, consisting of frictional and structural unemployment, with no unemployment due to the business cycle.