Labor Market Dynamics and Unemployment

Flashcards covering definitions and concepts related to labor market statistics, participation rates, types of unemployment, and market dynamics from the lecture.

Working Age Population (Canada)

Individuals aged 15 and older, excluding militarized or institutionalized individuals.

Working Age Population (US)

Individuals aged 16 and older.

Labor Force

The sum of employed and unemployed individuals.

Labor Force Participation Rate

The number of people in the labor force as a percentage of the working age population.

Unemployment Rate

The number of unemployed people divided by the labor force.

Marginally Attached Workers

People not in the labor force but who would work under the right conditions, including discouraged workers or those with other responsibilities, who have looked for work in the last year.

Discouraged Workers

Marginally attached workers who are disheartened and have given up actively looking for work.

Underemployed

People who are working but not working enough, or not using their skills fully.

Involuntary Part-time Workers

A subset of underemployed individuals who are not working enough hours.

Long-term Unemployed

Individuals who are unemployed and actively looking for work for six months or longer.

Market

A place or mechanism where buyers and sellers come together to transact.

Industry

A group of companies that provide a similar product or service.

Sector

A group of related industries.

Labor Supply Curve

An upward-sloping curve indicating that as wages increase, individuals are willing to supply more labor (or more people are willing to enter the labor force).

Labor Demand Curve

A downward-sloping curve indicating that as wages decrease, employers are willing to demand more labor due to diminishing marginal benefits from each additional worker.

Natural Rate of Unemployment

The long-run average or equilibrium unemployment rate, made up of frictional and structural unemployment.

Frictional Unemployment

Unemployment due to the natural friction of finding a new job, including time spent searching, interviewing, networking, and small mismatches in skills requiring minor training. It is typically short-term.

Structural Unemployment

Unemployment caused by long-term mismatches between the skills workers have and the skills employers need, or by structural impediments to wages falling such as government minimum wage laws, powerful unions, or efficiency wages. It is typically longer-term.

Cyclical Unemployment

Unemployment that occurs due to massive issues or downturns in the economy, like financial crises, recessions, or pandemics, resulting in unused resources and labor.

Efficiency Wages

Wages paid by employers that are significantly higher than the market rate for similar work, potentially causing structural unemployment as many workers are attracted to and seek these higher-paying jobs.