Miller Markham

Adult Population

Everyone age 16 or older.

Labor Force

Employed people + unemployed people.

Employed

Has a job, including part-time work.

Unemployed

No job, available to work, and looked in the last 4 weeks.

Not in the Labor Force

Not working and not currently looking for work.

Labor-Force Participation Rate

Labor Force ÷ Adult Population × 100.

Unemployment Rate

Unemployed ÷ Labor Force × 100.

Marginally Attached Worker

Wants work but has not searched recently.

Discouraged Worker

Stopped searching because of the job market.

U-1

Unemployed 15 weeks or longer.

U-2

Job losers + people who finished temporary jobs.

U-3

Official unemployment rate.

U-4

U-3 + discouraged workers.

U-5

U-3 + all marginally attached workers.

U-6

U-5 + people working part-time for economic reasons.

Broadest Unemployment Measure

U-6.

Frictional Unemployment

Between jobs or searching for a better job.

Structural Unemployment

Worker skills do not match available jobs.

Cyclical Unemployment

Unemployment caused by an economic downturn.

Natural Unemployment Rate

Frictional unemployment + structural unemployment.

Cyclical Unemployment Formula

Actual unemployment − natural unemployment.

Full Employment

Cyclical unemployment is about zero.

Potential GDP

Real GDP when the economy is at full employment.

Y in Y = AF(L,K,H,N)

Total output.

A in Y = AF(L,K,H,N)

Technology.

L in Y = AF(L,K,H,N)

Labor or workers.

K in Y = AF(L,K,H,N)

Physical capital.

H in Y = AF(L,K,H,N)

Human capital.

N in Y = AF(L,K,H,N)

Natural resources.

Physical Capital

Machines, equipment, and structures.

Human Capital

Education, skills, training, and experience.

Natural Resources

Inputs from nature, like land, oil, and minerals.

Technology

Knowledge of better ways to produce goods and services.

Worker Productivity Formula

Output ÷ hours worked.

Total Output Formula

Workers × hours × productivity.

Living Standard

Depends on Real GDP per person.

Real GDP per Person

Real GDP ÷ population.

Real GDP per Worker

Real GDP ÷ number of workers.

What Raises Labor Productivity?

More technology, capital, skills, or resources per worker.

Growth of Real GDP per Person

RGDP growth − population growth.

Rule of 70

70 ÷ growth rate = years to double.

Rule of 70 Reversed

70 ÷ years to double = growth rate.