ECON 102 - Macroeconomics Unit 2

Labor Force

Total number of workers

Equation of the Labor Force

Labor\ Force=Number\ Employed

+Number\ Unemployed

Unemployment Rate

Percentage of the labor force that is unemployed

Equation of Unemployment Rate

Unemployment\ rate = \frac{Number\ unemployed}{Labor\ force}*100

Labor-force participation rate

Percentage of the adult population in the labor force

Equation of the labor-force-participation rate

Labor\ force\ participation\ rate =\frac{Labor\ force}{Adult\ population}*100

Natural Rate of Unemployment

Normal rate of unemployment around which the unemployment rate fluctuates

Cyclical Unemployment

Deviation of unemployment from natural rate

Frictional Unemployment

Unemployment resulting from the process of matching workers and jobs

Structural Unemployment

Unemployment resulting from the number of jobs available being insufficient to provide a job to all people wanting jobs.

Job Search

Process of matching workers with appropriate jobs given tastes and skills

Sectoral Shifts

Changes in the composition of demand among industries or regions; causes temporary unemployment

Unemployment Insurance

Government program that partially protects workers’ incomes when they become unemployed

Collective bargaining

Process by which unions and firms agree on terms of employment

Strike

Union-organized withdrawal of labor from a firm

Efficiency Wages

Above-equilibrium wages paid by firms to increase worker productivity