Unit 2: Unemployment

3/9/17

Unemployment 

• Unemployment-  percentage of people who do not have a job in the labor force 
•  Unemployment rate- % of people who want a job but are not working 
• Unemployment rate =( # of unemployed/ # in labor force) x 100
• 4 types of unemployment...

1.  Frictional unemployment-  temporarily unemployed or between jobs 

-  individuals are qualified workers with transferable skills but they aren't working

    2.   Seasonal  unemployment -  due to time of the year and the nature of the job 

    3.   Structural unemployment -  changes in structure of the labor force make some skills obsolete 

- workers do not have transferable skills and these jobs never come back 

-  permanent loss of these jobs is called "creative construction"

    4.  Cyclical unemployment-  downturns in the business cycle 

-  As demand for goods and services falls demand for labor falls and workers are fired

• Standard unemployment rate - 4 to 5%
• Natural rate employment 

-  two of the three types of unemployment are unfavorable

-  frictional unemployment 

- structural unemployment 

-  together they make up the natural rate of unemployment,

 frictional + Structural = NRU

- Full employment =  no slip a cool employment full employment 

-Okund Law-  when unemployment rises 1% above the NRU gap falls about 2%