The Nature and Concepts of Unemployment

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The Nature and Concepts of Unemployment ECO285 - Macroeconomics The Nature and Concepts of Unemployment peak trough recovery contraction Dr. Dennis Foster

Unemployment Measured rate depends on the population, the civilian population, the civilian population over 16 yrs. old (&…), the labor force, and whether one is looking for work.

January 2018 - Getting from A to Z

Who is employed & who is unemployed? To be employed, you have to be working (!) at least 1 hour during survey week or, absent from work due to illness/vacation/strike on a maternity leave are an unpaid family member To be unemployed, you have to be: in the labor force willing to work able to work and looking for work

Data – Unemployment Rate (Ur) = (#unemployed)/(#labor force) 4.1%

Data – seasonal adjustments To remove the influence of predictable seasonal fluctuations, such as: Students graduating in May and entering the labor force. Christmas shopping season and temporary boost in employees. Other seasonal activities – Snowbowl, Grand Canyon, et al. Typical weather-related effects on employment. Other holiday effects. All the data you see is adjusted.

Why do people become unemployed?

How long do people stay unemployed?

Good News for You*! *For those over 25 years old.

A paradox about unemployment Can the number of people employed rise at the same time as the unemployment rate rises? Yes!!! If the labor force is rising at the same time. For example: Ur = 5,000/100,000 = 5%, and, now Ur = 7,500/110,000 = 6.82%, Labor Force, employed, unemployed, Ur rate +10,000 +7,500 +2,500

Unemployment Types Frictional Unemployment People between jobs (quit, fired, new entrants, reentrants) Normal and necessary (!) Most unemployed find jobs quickly. Structural Unemployment Permanent job loss (technological change, trade effects) Economic growth exacerbates this. Cyclical Unemployment Temporary unemployment due to recession. Generally, the focal point of government fiscal policy.

Unemployment Types: Special Cases Seasonal Unemployment Examples: Snowbowl, Agriculture … Data adjusts for seasonal variation. Induced Unemployment Due to government policies. Examples: Min. wage, Housing regs., ObamaCare May work the other way: Airline deregulation in 1980 boosted employment about 50% soon thereafter.

The Nature and Concepts of Unemployment ECO285 - Macroeconomics The Nature and Concepts of Unemployment peak trough recovery contraction Dr. Dennis Foster