Unemployment

Population: Number of people in a country total.

Labor Force: Number of people in a country that
is either employed or unemployed.

1.) Able and willing to work.
2.) Must be 16 years of age and older.
3.) You must work at least one hour
every 2 weeks.

Unemployed: People 16 years of age and older
older that do not have a job.

Unemployment : Failure to use available resources
particularly labor to produce desired goods and services.

Underemployment: Not giving full effort.

Unemployment rate formula :

Unemployed people

------------------------       X 100

labor force

The ideal unemployment rate is 4-5%

Not In The Labor Force : 

 1. Students.
2. Prisoners.
3. Anyone in a hospital/ mental hospital.
4.Military.
5. Completely Disabled People.
6.People who give up looking for a job.
7. Homemakers.
8. Choosing not to work.
9.Retired People.

Unemployment Benefits: Only towards laid-off workers.

Cost-Push Inflation: Increase in factors of production
Ex: Price of oil, labor, and steel,

-Rise increase of resources cost.

-Output in employment will decline
while the price level is rising.

Frictional Unemployment : 

-People between jobs.
-Temporarily unemployed.
-Transferable skills.
-High school or college graduates.
-People who are fired and are looking for a job.
-People who are looking for a better job.
-Seasonal unemployment due to the time of
year and nature of the job.
-Lifeguard.
-Bus Drivers.


Structural Unemployment: -Changes in the labor force make some
skills obsolete.
-Workers who do not have transferable skills will never come back.
-High school dropouts.
-Typewriter fixer/ VCR fixer.
-workers must learn skills in order to get a job.
-Permanent loss of these jobs is creative destruction.

Cyclical Unemployment: -Unemployment caused by economic downturns
as demand for goods and services falls.
-Demand for labor falls and workers are fired and laid off.
Ex: Recession.

Frictional / and Structural cannot be avoided.

Frictional + Structural = NRM (National Rate Of Unemployment)

Full Employment (4-5%) : No Cyclical unemployment
( FE or NRM )

Okuns Law : For every 1% increase in the
unemployment rate causes a 2%
decline in GDP.

(Reasons it is bad) -The burden of unemployment is
not equally shared in society.

-It causes social unrest and is
hard on individuals in families.

Rule of 70:Calculates the opposite number
of years required to double GDP.