Unemployment

  • Goal: full employment
    • Zero unemployment is always impossible in a market economy
    • We strive for full employment and no cyclical unemployment 
    • An unemployment rate of about 4-6% is normal during full employment
  • The unemployment rate
    • Percentage of a nation’s labor force that is unemployed
    • Labor force is made up of individuals 16+ who have a job or are actively seeking a job
  • Types of Unemployment
    • Frictional: when people take time to find a job. In between jobs
    • Laid off
    • Changes jobs
    • Needs time to find a job after graduating from school
    • Structural: when skills don't match what jobs are available for (structure of) the current economy
    • Causes: new technology, new resources, changes in consumer demand, globalization (shift to foreign markets), lack of education
    • Seasonal: people work at specific times of years
    • Spirit halloween
    • Santa claus only works in the winter
    • Cyclical: goes up during times of economic turmoil, goes down during times of economic prosperity
    • A recession causes ppl to save more and spend less, so companies may slow down production and lay off workers