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

2. 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.

3. January 2018 - Getting from A to Z

4. 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

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

6. 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.

7. Why do people become unemployed?

8. How long do people stay unemployed?

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

10. 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, , ,500

11. 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.

12. 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 boosted employment about 50% soon thereafter.

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