Unemployment

Unemployment

• Failure to use available resources particularly labor to produce desired 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 

Employed

• 16 years of age or older and have a job
• You must at least work an hour every two weeks in order to be considered employed. 

Unemployed

• People 16 years of age or oldr that don't have a job but have actively searched for a job in the last two weeks. 

Not in the Labor Force 

• Kids
• Full time students
• Mentally Institutionalized 
• Incarcerated 
• Disabled 
• Retirees
• Military Personel 
• Stay at home moms/dads 
• Discouraged workers  

Unemployment Rate

1. # of unemployed/Total Labor Force x 100 
2. Total Labor Force = Employed + Unemployed

Types of Unemployment

Frictional

• Temporarily Unemployed or in between jobs 
• Qualified workers with transferable skills
• Ex: High School Students and people looking for a better job  

Seasonal

• Due to the time of the year 
• Ex: Lifeguards, construction workers, school bus drivers, mall santas and easters

Structural

• Changes in the structure of the labor force make some skills absolete 
• Workers do no have transferable skills and these jobs will never come back

Creative Destruction

• All jobs are created, other jobs are lost or destroyed
• Ex: VCR Repairment, Typewriter Repairment 

Cyclical

• Results from economic downturn such as a recession
• As demand for goods and services falls. demand for labor falls and workers are laid off

Full Employment of Natural Rate of unemployment  (Frictional + Structural)

Okuns Law

• When unemployment increases by 1% above the natural rate of unemployment then real GDP will fall by 2% 

Rule of 70

• # of years that is required for GDP to double 
• If the annual inflation rate is 2% how many years will it take for GDP to double.