Unemployment Rate and Labor Force: Key Concepts and Formulas in Economics

What does the unemployment rate measure?

Unemployed workers as a percentage of the labor force.

Which group is included in the labor force?

Unemployed workers.

What is a discouraged worker?

A person who stops looking for work because they believe no jobs are available.

When does the unemployment rate underestimate true unemployment?

When part-time workers want full-time work but cannot get it.

What is frictional unemployment?

A worker who quits and moves to find a better job.

What type of unemployment is tied directly to the business cycle?

Cyclical unemployment.

What is structurally unemployed?

A worker replaced by machines.

How is a full-time student not seeking work classified?

Out of the labor force.

In a recession, sticky wages act as a ______ causing ______.

Price floor; unemployment.

What is an incorrect statement about the natural unemployment rate?

It includes cyclical unemployment.

What is the theory where wage cuts risk losing top workers?

Adverse selection of wage cuts.

What was the number of employed in Germany (2016) in thousands?

43,470.

What was the number of unemployed in Germany (2016) in thousands?

2,626.

What was the labor force participation rate in Germany (2016)?

60.6%.

What is the unemployment rate formula?

(Number of Unemployed ÷ Labor Force) × 100.

How do you calculate the number of unemployed?

Labor Force × (Unemployment Rate ÷ 100).

How do you calculate the number of employed?

Labor Force − Number of Unemployed.

What is the labor force participation rate (LFPR) formula?

(Labor Force ÷ Working-Age Population) × 100.

What is the labor force formula?

Employed + Unemployed.

What is the employment-population ratio formula?

(Employed ÷ Working-Age Population) × 100.

What is the cyclical unemployment formula?

Actual Unemployment Rate − Natural Unemployment Rate.

What are the components of the natural unemployment rate?

Frictional unemployment + Structural unemployment.

What is structural unemployment?

Unemployment caused by skills mismatches as industries change.

What is cyclical unemployment?

Unemployment caused by downturns in the business cycle.

What is an underemployed worker?

Someone working part-time who wants full-time employment.

How do you calculate unemployed?

Multiply Labor Force × Unemployment Rate. Example: 46,096 × 0.057 = 2,626 unemployed.

How do you calculate employed?

Subtract Unemployed from Labor Force. Example: 46,096 − 2,626 = 43,470 employed.

How do you calculate Labor Force Participation Rate?

(Labor Force ÷ Working-Age Population) × 100. Example: (46,096 ÷ 76,066) × 100 = 60.6%.