Unit 2: Unemployment
Population - number of people in a country .
Labor force - number of people in a country a country that are classify as employed or unemployed.
Employed- people who are 16 year of age or older that have a job .
Unemployed - people who are 16 year of age or older who did not have a job , but have actively searching for a job in the last 2 weeks.
Unemployment- failure to use a viable resources particularly labor to produce desire good and services.
Unemployment rate:
# of unemployed/ Total labor force x 100
(# of employed + # of unemployed) 4 to 5% = unemployment rate
Not in the labor force
Labor force - number of people in a country a country that are classify as employed or unemployed.
Employed- people who are 16 year of age or older that have a job .
Unemployed - people who are 16 year of age or older who did not have a job , but have actively searching for a job in the last 2 weeks.
Unemployment- failure to use a viable resources particularly labor to produce desire good and services.
Unemployment rate:
# of unemployed/ Total labor force x 100
(# of employed + # of unemployed) 4 to 5% = unemployment rate
Not in the labor force
- Students
- Retired People
- institutionalized (mental)
- Prisoners
- Military
- Disabled
- People who given up looking for a job
Type of Unemployment
Frictional - between jobs ( temporally unemployed )
- individual are qualified workers with transferable skills but they are not working.
- High school or college graduates looking for a job
- Individual who were fired or layed off
- People who were looking for a better job
Seasonal- due to the time of the year and natural of the job( life guards , construction workers , school bush drivers )
Structural- changes in the structure of the labor force make some skills obsolete . Workers do not have transferable skills and the job will never come back.
Creative destruction- as jobs are created other jobs are lost. ( jobs of the future destroy jobs in the past)
- workers most learn new skills to get a job
- VCR , engineers
Cyclical - type of unemployment that results in economical down turns ,a s demands for goods are services falls , demand for labor falls. workers are fired or layed off. ( bankrupt , recession )
Frictional , structural are unavoidable
Frictional + Structural = Natural rate of unemployment (NRU)
4 to 5 % Full employment or NRU = no cyclical unemployment
Okun's Law - when unemployment rises 1% above the NRU GDP will fall 2%
Rule of 70 - used to determine how many year it will take for a value ti double given a particular annual growth rate (ex if you put $ 20k in the bank and it can yearly interest 7% how many years will it take for the income to double ? )
70/interest rate = amount of years
How do nations keep track of discouraged workers when people who are unemployed decide to stop searching for a job?
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