Unemployment
Number of people actively searching for a job for 4+ weeks who are unable to find one
Employed
Currently has a job, part time or full time
Labor force participation rate
Labor Force age range
16-64
Unemployment rate
What does the unemployment rate indicate?
How easy or hard it is to get a job
Discourage workers
Unemployed who gave up on looking for a job (not counted)
Marginal Attached Workers
would like to be employed and have looked for a job in the recent past but are not currently looking for work.
U3 unemployment rate
Official unemployment rate
U4 unemployment rate
The total number of unemployed people plus discouraged workers.
U5 unemployment rate
U4 + other "marginally attached workers",
U6 unemployment rate
U5 + Part-time workers who want to work full-time, but cannot due to economic reasons (underemployment).
Underemployment
People who want to work more hours but can’t
U1 unemployment
The percentage of people unemployed for 15 weeks or more.
U2 unemployment
The percentage of people who lost their jobs and anyone who finished a temporary job.
During a recession unemployment ___
rises
During expansion unemployment ___
falls
Frictional unemployment
unemployment due to the time workers spend in job search
Causes of frictional unemployment
1. The constant process of job destruction and job creation.
2. New workers are always entering the labor force.
Does frictional unemployment always exist?
Yes, there are always people looking for better jobs or even their first job.
If unemployment is low most of it is probably ____
Frictional unemployment
Structural unemployment (skills)
unemployment that results when workers lack the skills required for the jobs that are available
Structural unemployment (jobs)
unemployment that results when more people are seeking jobs in a labor market than there are jobs available at the current wage rate.
Causes of structural unemployment
1. lack of skills
2. lack of automation
3. lack of geographic migration
4. minimum wages
5. insufficient product demand
High minimum. wages cause:
A surplus of labor, AKA structural unemployment
Labor unions fighting for higher wages and more benefits can cause:
Structural unemployment
Efficiency wages
employers set wages above equilibrium as an incentive for better employee performance (can cause structural unemployment).
Natural unemployment
Frictional+Structural unemployment
Actual unemployment
Natural+Cyclical unemployment
Cyclical unemployment
the share of unemployment that arises from the
business cycle. (layoffs in a poor economy)
Causes of cyclical unemployment
Changes in the Labor Force, Labor Market Institutions, Changes in Government Policies