UNEMPLOYMENT
- Percentage of people who do not have a job, but are part of the labor force
Labor Force
- Number of people in a country that are classified as either employed or unemployed
- (# of unemployed + # of employed)
Unemployment Rate
- (( # of unemployed)/ (# of unemployed + # of employed)) x 100
Not in the Labor Force- kids
- full time students
- retired people
- military personnel
- mentally insane
- incarcerated
- stay at home parents
- discouraged workers
Frictional Unemployment
- Between jobs because they have chosen new opportunities, lifestyles, and education levels.
Ex. quit job to go to school or college graduate
Seasonal Unemployment
- People wait for the right season to conduct their trade.
Ex. mall Santa, school bus driver, or lifeguard
Cyclical Unemployment
- Associated with downturns in business cycle.
Ex. recession
Structural Unemployment
- Associated with a lack of skills, or declining industry, or change in technology.
Ex. can't read or write or factory moves cities
Full Employment
- Occurs when there is no cyclical unemployment present in economy
- Natural Rate of Employment: 4-5%
- Achieved when labor markets are in balance
- Structural and Frictional
Why is unemployment good?
- Less pressure to raise wages
- More workers available for future expansions
Why is unemployment bad?
- Not enough competition
- Too much poverty
- Too much government assistance needed
Okun's Law
- For every 1% of unemployment above NRU, causes a 2% decrease in real GDP
I enjoy how you include a small comic in each of your posts. Its helps me humorously and visually understand the concept we are learning. One thing i want to point out is that for some people, it is hard to express a formula in sentence form for them to firmly grasp the idea.
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