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Economics Unemployment Viktor Ni, NIS 2014 12.2B Economic stability Безработица Viktor Ni, NIS 2014

Leaning objective Calculate the unemployment rate distinguish between employed and unemployed

Who is consider to be unemployed? Part 1 Who is consider to be unemployed?

Безрабо́тица — наличие в стране людей, составляющих часть экономически активного населения, которые способны и желают трудиться по найму, но не могут найти работу.

Уровень безработицы в мире по состоянию на январь 2009 года (по данным ЦРУ)

Measurement of Unemployment The U.S. Bureau of Labor Statistics (BLS) conducts a nationwide random survey of some 60,000 households each month to determine who is employed and who is not employed. In a series of questions, it asks which members of the household are working, unemployed and looking for work, not looking for work, and so on.

The labor force, employment, and unemployment, 2007.

1. People under 16 years of age and people who are institutionalized Children + Institutionalized: in mental hospitals correctional institutions

Not in labor force Adults who are potential workers but are not employed and are not seeking work. homemakers, full-time students, or retirees.

The labor force about 50 percent of the total population in 2007 The labor force consists of people who are able and willing to work. Both those who are employed and those who are unemployed but actively seeking work are counted as being in the labor force

The unemployment rate % is the percentage of the labor force unemployed: %

The unemployment rate Calculate the rate of unemployment for 2007: 7,1/153,1*100%=4,6%

Part 2 Critics of BLS

The BLS lists all part-time workers as fully employed. In 2007 about 20 million people worked part-time as a result of personal choice. But another 4.6 million part-time workers either wanted to work full-time and could not find suitable full-time work or worked fewer hours because of a temporary slack in consumer demand. Таким образом, уровень безработицы уменьшен

Discouraged workers are not counted as labor force. The problem is that many workers, after unsuccessfully seeking employment for a time, become discouraged and drop out of the labor force. The number of such discouraged workers was 396,000 in 2007. Таким образом, проблема безработицы преуменьшается.

Part 3 Types of Unemployment

Frictional Unemployment Structural Unemployment Cyclical Unemployment Full employment

1. Frictional Unemployment Economists use the term frictional unemployment— consisting of search unemployment and wait unemployment— for workers who are either searching for jobs or waiting to take jobs in the near future. The word “frictional” implies that the labor market does not operate perfectly and instantaneously (without friction) in matching workers and jobs. Frictional unemployment is inevitable and, at least in part, desirable. Many workers who are voluntarily between jobs are moving from low-paying, low-productivity jobs to higher-paying, higher-productivity positions. That means greater income for the workers, a better allocation of labor resources, and a larger real GDP for the economy.

2. Structural Unemployment Here, economists use “structural” in the sense of “compositional.” Changes over time in consumer demand and in technology alter the “structure” of the total demand for labor, both occupationally and geographically Occupationally, the demand for certain skills (for example, sewing clothes or working on farms) may decline or even vanish. The demand for other skills (for example, designing software or maintaining computer systems) will intensify Geographically, the demand for labor also changes over time. An example: the migration of industry and thus of employment opportunities from the Snow Belt to the Sun Belt over the past few decades. Another example is the movement of jobs from inner-city factories to suburban industrial parks.

Distinction between frictional and structural unemployment The key difference is that frictionally unemployed workers have marketable skills and either live in areas where jobs exist or are able to move to areas where they do. Structurally unemployed workers find it hard to obtain new jobs without retraining, gaining additional education, or relocating. Frictional unemployment is short-term; structural unemployment is more likely to be long-term and consequently more serious

3. Cyclical Unemployment Unemployment that is caused by a decline in total spending is called cyclical unemployment and typically begins in the recession phase of the business cycle. The 25 percent unemployment rate in the depth of the Great Depression in 1933 reflected mainly cyclical unemployment, as did significant parts of the 9.7 percent unemployment rate in 1982, the 7.5 percent rate in 1992, and the 5.8 percent rate in 2002.

Definition of Full Employment Economists describe the unemployment rate that is consistent with full employment as the full-employment rate of unemployment, or the natural rate of unemployment (NRU). At the NRU, the economy is said to be producing its potential output. This is the real GDP that occurs when the economy is “fully employed.”

Okun’s law Society loses real GDP when cyclical unemployment occurs; For each 1 percentage point of unemployment above the natural rate, the U.S. economy suffers a 2 percent decline in real GDP below its potential GDP.

Calculation for 1992 The unemployment rate was 7.4 percent, natural rate of unemployment 6.0 percent. 1992’s potential GDP of $7337 billion. Calculate the loss in real output. GDP gap: (7,4-6)*2=2,8% Lost in Real GDP = 7337*2,8%=$205 billion

5 interesting questions about job

Which country has more working women? 1 Should women work? Which country has more working women? China USA India Europe

http://www.bls.gov/fls/chartbook/2012/chart2.1.pdf

Which country experience the highest rate of unemployment in 2010? Finland Denmark Norway Austria Spain USA Which it is easier to find jobs?

http://www.bls.gov/fls/chartbook/2012/chart2.9.pdf

Is it necessary to study? Can I get job without it? 3 Is it necessary to study? Can I get job without it?

http://www.bls.gov/fls/chartbook/2012/chart2.11.pdf

For whom it is easy to find job: Young or Adult? 4 For whom it is easy to find job: Young or Adult?

http://www.bls.gov/fls/chartbook/2012/chart2.10.pdf

Which sector provide more jobs? 5 Which sector provide more jobs? Industry Service Agricultural

http://www.bls.gov/fls/chartbook/2012/chart2.8.pdf

Homework

Анекдот дня Мне интересно, откуда берутся люди с опытом работы, если без опыта на работу не берут…