Macroeconomics

Current Population Survey (CPS)

Conducted by the Census Bureau

• Sample of households is representative of the whole country

• Asks questions to CNAs

BLS Categorization of CNAs based on CPS

1, Employed: full and part time workers

2. Unemployed: not working for pay, able to, actively looking

3. Not in Labor force: retirees, everyone else, SAH parents

Unemployment rate calculation

number of unemployed / labor force X 100

Thinking beyond the UR

• reasons for working part time

• Reasons for being unemployed (job leavers vs. losers)

• Length of time being unemployed

• Marginally attached workers

voluntary part time workers

part time for non-economic reasons

involuntary part time workers

working part time for economic reasons

Labor Force Participation Rate (LF as percentage of CNA population)

Labor force/CNA population X 100

Aging Population and Declining LFPR

1. Less economic growth

2. More pressure on social programs

How to fix negative effects of decreasing LFPR on aging population

• Get more young people to work

• incentivise having children

• incentivise immigration

• Reform social programs (raise retirement age, lower benefits)

Four Types of Unemployment

1. Frictional: voluntary employment transition

2. Structural: skills mismatch, more long term due to creative destruction

3. Cyclical: due to “busts” in business cycle, economy not doing well

4. Seasonal: seasonal jobs expiring

UR Decrease

• more jobs available → economic growth

• retireees open up job spots →no econ. growth bc run out of available skilled laborers

U3 gives overly positive estimates in recessions due to…

ignoring involuntary part time workers

Why will unemployment never be zero?

Frictional unemployment includes students graduating college and transitioning into the workforce

Marginally attached workers

people who want jobs but stopped looking in the last four weeks