Unemployment

Definition of Unemployment

• To be classified as unemployed, an individual must:

  • Be part of the labor force

  • Be at least 16 years old

  • Not be in the armed forces or institutionalized

  • Have actively sought work in the last 4 weeks

Key Concepts of Labor Force and Participation

• Labor Force: Sum of employed and unemployed individuals.

  • Formula:
    ext{Labor force} = ext{Employed} + ext{Unemployed}

• Labor Force Participation Rate (LFPR): Percentage of the population in the labor force.

  • Formula:
    ext{LFPR} = rac{ ext{Labor force}}{ ext{Population}}

Unemployment Rate Calculation

• Unemployment Rate Formula:
  u = rac{ ext{# Unemployed}}{ ext{# In Labor Force}}

Types of Unemployment

• Frictional Unemployment: Temporary unemployment during job transitions.

• Structural Unemployment: Mismatch between workers' skills and available jobs.

• Cyclical Unemployment: Fluctuates with economic cycles.

Concept of Full Employment

• Full Employment Definition: Not 100% job attainment; zero cyclical unemployment with allowance for frictional and structural unemployment.