15  Unemployment

Objectives

  1. Know key terms in computing unemployment: working-age population, employed, unemployed, labor force
  2. Compute unemployment and labor force participation rates
  3. Identify different types of unemployment
Term Definition
Working-Age Population Those age 16 or older who are not in the military or institutionalized
Employed Those who are part of the working-age population and currently have a job
Unemployed Those who are part of the working-age population, not currently working, actively searching for work, and able to accept a job if offered
Labor Force The sum of employed and unemployed individuals
Unemployed

Someone is unemployed if 1. Part of the working age population 2. Not currently working 3. Actively searching for work 4. Able to accept a job if it was offered

Unemployment Rate

The percentage of the labor force that is unemployed.

15.1 Data

15.2 Unemployment Types

Type Definition
Frictional Unemployment Unemployment due to the time it takes for employers to search for workers and workers to search for jobs
Structural Unemployment Unemployment that occurs because wages don’t fall to bring labor demand and supply into equilibrium
Cyclical Unemployment Unemployment that is due to a temporary downturn in the economy

15.3 Conclusion

  • This lecture studies the measurement of unemployment
  • We study its construction from several measures of the population
  • We identify different types of unemployment (frictional, structural, cyclical)