Chapter 8 Eco

Unemployment Rate

Percentage of adults in the labor force who do not have jobs but are actively looking for one

Labor force

Total number of people who are unemployed or employed

Out of the labor force

People who are not working and not looking for work. 

Labor Force Participation Rate

Percentage of total adult population that is in the labor force

Hidden Unemployment

People who aren’t fully counted in unempoyment stats. Includes the underemployed( working a job below skill level) and discourged workers (who have stopped looking for job)

Cyclical Unemployment

Unemployment that is closely tied to the business cycle. Higher during recessions and lower during economic expansions

Sticky Wages

Concept that wages do not fall easily, even when demand for labor decreases. This is a key reason for unemployment in the short run

Natural Rate of Unemployment

The unemployment rate that exists in a healthy growing economy. Sum of frictional and structural unemployment

Frictional unemployment

Short term unemployment that occurs as workers move between jobs or enter the labor force. “Job search” unemployment

Structural unemployment

Unemployment that happens because individuals lack the skills employers value. A mismatch between worker skills and employer needs