Econ 102: Lecture 2c - Unemployment Rate

Unemployment Rate

lagging, aggregate indicator which shows how the economy is doing

*tends to fall when economy is doing well, and rise during recessions

Labour Force Survey (LFS)

Nation wide survey report which includes various statistics related to the labour market (unemployment, participation rate, employment rate, with info divided by race, gender, age, industry, and education)

*56,000-100,000 people surveyed

LFS Recent stats

Unemployment rate constant at 5.8% in end of 2023, with steady increase since beginning of 2023

Working age population

individuals aged 15 and over

Employed persons

People who:

1. Did any paid work through employer-employee contract at a job or business

2. is self employed

3. has job but not at work due to illness/disability, family/personal issues, vacation, labour dispute

Unemployed persons

People who:

1. people who are available for work but are on temporary layoff during week of survey with expectation of recall

2. people who are available for work, but are without and are actively looking in past 4 weeks

3. people who are available for work, and had new job to start within 4 weeks of the survey

Not in the labour force

People who:

1. are unwilling/unable to offer or supply labour services under existing conditions of their labour market (neither employed or unemployed)

Labour Force calculation

Number of people employed (E) + number of people unemployed (U)

Unemployment rate calculation

*measures the percentage of people who are 15 years and older, who want to work but who do not have job (does not measure people who are discouraged and left labour force, so may underestimate number of people without jobs)

Employment rate calculation

Labour Force Participation rate calculation

Discouraged workers

those who do not have job, and have given up looking for one

e.g.

Unemployed long-term

if the worker has been jobless for 27 weeks or more but have been actively searching for a job over the previous month

Why long-term unemployment is important

1. Workers unemployed for extended periods of time tend to suffer with anxiety and depression

2. Unemployed workers lose skills over time, making it harder to get a job as more time passes

Unemployment rate trends by province

Eastern/Maritime provinces have higher unemployment, with NFL having highest rate

Quebec has lowest rate

National average if 5.4%

*used to calculate the level of employment insurance workers receive in each province, workers in regions where the unemployment rate is high need lower amount of insurable employment hours to qualify for employment insurance

Unemployment rate by age trends

Older workers have lower unemployment rate than younger workers

unemployment rate of workers aged 25-54 has been lower than the unemployment rate of workers aged 20-24 since 1976

Drastic difference between unemployment rate of teenage youths (rate is much higher) and young adults

Unemployment rate by educational attainment trends

Higher educational attainment correlated with lower unemployment rate

*Since mid-2000’s, differences in the unemployment rate between workers with a bachelor’s degree and workers with post-graduate degrees have been small but still exist

Unemployment rate by gender trends

Unemployment rate for males was lower from mid 1970’s to late 1980’s

Since 2000, female unemployment rate has been lower

*Reasons = less job loss in service sector (compared to manufacturing), which has more females working in it, and higher educational attainment rate with females

Labour Force participation rate trends

Gender: Female labour participation rate has increased, whereas male labour participation rates have declined (changing gender roles, new tech in households, more employment opportunities, increasing educational attainment, lower fertility rate)

Overall labour force participation was steadily rising, until 2007-2008 recession where it has been on a slow decline

*USA specifically has trend of decline in labour participation rate of prime-age males since 1980’s

Unemployment Rate: Canada vs. US

Both countries measure unemployment differently, such as:

1. 15 year olds being included in labour force in Canada, but not in US

2. US only counts someone as unemployed if they are actively looking for a job (visiting employment agencies, sending job applications and attending interviews), whereas Canada counts people who are both actively and passively looking for a job (simply looking at job ads on the internet or the newspaper without applying for any jobs)

Harmonized Unemployment Rate

Because of different measurement tactics, unemployment rates between countries cannot be directly compared.

Thus the OECD publishes this report where unemployment rate calculations are standardized for better comparison between countries