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

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

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 Getting from A to Z

Who is employed & who is unemployed? unemployed  To be unemployed, you have to be: in the labor force willing to work able to work and looking for work employed  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

Data – Unemployment Rate (U r ) = (#unemployed)/(#labor force) 5.7% 5.1%

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?

Good News for You!

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

 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. Unemployment Types: Unemployment Types: Special Cases

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