Unemployment Unit 5

A set of 20 vocabulary flashcards covering key concepts of labor economics, unemployment metrics, and market fluctuations based on the Unit 5 lecture notes.

Labor Force

The sum of employed and unemployed individuals within the working-age population.

Labor force pt. 2

• they are 16 years of age or older

• They reside within the 50 states or the District of Columbia

• They are not an inmate of institutions, mental facilities or elderly homes

• They are not on active duty in the armed forces

Unemployed

Individuals who do not have a job, are available to work, and have been actively looking for a job in the last four weeks.

Unemployment Rate (u)

The number of unemployed persons divided by the total labor force.

u = unemployed/labor force

Labor force formula

Labor Force = Employed + Unemployed

Discouraged workers

workers who have given up looking for a job specifically for a job market related reason but would like a job if offered one.

U1

The percent of the civilian labor force that has been unemployed for 15 weeks or more.

U2

The unemployment rate representing job losers and persons who completed temporary jobs, this includes U1 plus those who have finished temporary assignments.

U3

The official unemployment rate

U4

All individuals in U3 plus discouraged workers.

U5

All individuals in U4 plus marginally attached workers.

U6

All individuals in U5 plus total individuals employed part time for economic reasons.

Marginally attached workers

People who are neither working nor looking for work, but indicate they want and are available for a job and have looked for work sometime in the recent past.

Part time for economic reasons

Individuals who want and are available for full-time work but have had to settle for a part-time schedule.

Labor Force Participation Rate (LFPR)

The ratio of the labor force to the working-age population: $\frac{\text{Labor Force}}{\text{Working-age population}}$.

Working-age population

Working age population = labor force + out of labor force

Procyclical

An economic variable that increases during expansions and decreases during recessions.

Countercyclical

An economic variable that increases during recessions and decreases during expansions.

Acyclical

An economic variable that does not vary with the business cycle.

Labor Demand

The number of workers firms want to hire, represented by a downward-sloping curve due to diminishing marginal product.

Labor Supply

The number of workers looking for jobs, represented by an upward-sloping curve as higher wages attract more job seekers.

Labor Market Equilibrium

The point where the quantity of labor demanded (number of jobs) is equal to the quantity of labor supplied (number of workers seeking jobs).

Frictional Unemployment

Short-term unemployment that results from people switching jobs. They are unlikely to accept any offers immediately as they seek the right job.

Structural Unemployment

Long-term unemployment due to a change in the structure of the economy where there are not enough jobs for people with special skill sets.

Unemployment rationing

A term for structural unemployment occurring when wages are kept above the equilibrium wage by factors like minimum wage, unions, or efficiency wages.

Natural Rate of Unemployment

The sum of frictional and structural unemployment which is treated as a fundamental part of the economy.

Cyclical Unemployment

the part of unemployment that happens because the economy is in a downturn or recession. These fluctuations occur during the business cycle and can persist for long periods.

Sticky Wages

where wages are slow to adjust to changes in labor market conditions, often remaining above equilibrium and contributing to unemployment.