2. Total Population age 16 and over Not in Labor Force Not in Labor Force Armed forces Household workers Students Retirees Disabled persons Institutionalized Discouraged workers Civilian labor force Employed Employed Employees Self-employed Unemployed Unemployed New entrants Re-entrants Lost last job Quit last job Laid off

4. Frictional Frictional – “temporary”, “transitional”, “short-term.” (“between jobs” or “search” unemployment) “fired” or “quit” 1.People who get “fired” or “quit” to look for a better one. [30 mil. a yr] [6 million U.S. workers get laid off each year] “Graduates” 2. “Graduates” from high school or college who are looking for a job. “Seasonal” 3. “Seasonal” or weather-dependent jobs such as “agricultural”, “construction”, “retail”, or “tourism”. [lifeguards, resort workers, Santa’s, & migrant workers.] Frictional unemployment signals that “new jobs” are available and reflect of “freedom of choice”. These are qualified workers with “transferable” skills.

7. Structural“technological”“long term”. Structural – “technological” or “long term”. “structure” “skills obsolete”. [also caused by“international competition”] There are basic changes in the “structure” of the labor force which make certain “skills obsolete”. [also caused by“international competition”] AutomationAutomation may result in job losses (a robot took your job). autocarriage makers The auto reduced the need for carriage makers. Farm machineryfarm laborers Farm machinery reduced the need for farm laborers. Consumer tasteConsumer taste may make a good “obsolete”. These jobs do not come back.These jobs do not come back. Non-transferable skillsNon-transferable skills– choice is prolonged unemployment or retraining. “Creative destruction” “Creative destruction” means as jobs are created, other jobs are lost. Jobs of the future destroy jobs oftoday. natural rate of unemployment or full employment. *Frictional and Structural make up the natural rate of unemployment or full employment.

9. 6 5

10. 2 4 billion 4 20 billion 8 8 billion

15. WEWE Quantity of Labor LELE 0 Labor demand Wage Surplus of labor = Unemployment Minimum wage LDLD LSLS Labor supply

18. Cyclicaleconomic downturns business cycle Cyclical – economic downturns in the business cycle. Cyclical fluctuationsdeficient ADCyclical fluctuations caused by deficient AD Durable goods jobsDurable goods jobs are impacted the most. can be postponedcan be repairedThese can be postponed because they can be repaired. Cyclical unemploymentreal unemployment.Cyclical unemployment is real unemployment. These jobs do come back

20. Overstate or Understate?

21. PL GDP R LRAS YFYF AD1 SRAS PL1 Y1Y1

22. PL GDP R LRAS YFYF AD SRAS PL ___ output ___ employment ___ unemployment ___ PL

24. The average unemployment rate in France, Germany, & Italy and Canada remained high. European labor markets are less flexible.