Unit 2: unemployment

Unemployment- the failure to use available resources, particularly labor, to produce desire goods and services
population- number of people in a country
labor force- number of people in a country that are classified as either employed or unemployed

groups 
employed: 16 years of age or older and has a job
must work at least one hour every two weeks

unemployed: 16 years of age or older that does not have a job, but have actively searched for a job in the last two weeks

not in labor force

• kids, full- time students
• institutionalized ( mental institutions) 
• incarcerated ( prison)
• disabled 
• retirings
• military personnel 
•  stay at homes
• discouraged workers ( failed to look for a a job) 

Unemployment Rate Formula
# Unemployed
________________ *100

Total Labor Force

4 Types

Frictional Unemployment

-temporarily unemployed or ( in between jobs)
- qualified workers with transferable skills
Structural Unemployment

-changes in the structure of the labor force makes some skills obsolete
-no transferrable skills
-jobs will not come back
-creative destruction
-jobs created, other jobs destroyed
ex: VCR repairmen
Seasonal Unemployment

-due to time of the year
ex: lifeguards, bus drivers
Cyclical Unemployment

-unemployment that results from economic downturns such as depression
-as demand for goods and services fall, demand for labor falls and workers are laid off

full employment

4 to 5% unemployment

if there is no cyclical unemployment 

NRU ( natural rate of unemployment) frictional + structural employment

Okun's law- when unemployment increases by one percent above the natural rate of unemployment. then GDP falls by 2%

Rule of 70- the number of years that is required for GDP to double