Unemployment
Unemployment: failure to use available resources (particularly labor) to produce desired goods and services
Population: the total amount of people in a country
Labor force: number of people in a country that is employed or unemployed
3 groups of people: employed, unemployed, and not in the labor force
Employed:
People who are 16 years of age and older who have a job
If you work at least 1 hour every 2 weeks you are considered to be employed
Unemployed:
People who are 16 years of age or older that do not have a job but they are actively searching for a job within the last 2 weeks
Not in the labor force:
ex: kids, full time student, retirees, disabled people, home-makers, mentally institutionalized people, incarcerated (prison or jail), military, discouraged workers (people who gave up)
types of unemployment: frictional, seasonal, structural, and cyclical
unemployment rate:
(the number of unemployed) / (total labor force [#of unemployed+#of employed] ) x100
Frictional unemployment: temporarily unemployed or in between jobs
workers are qualified, have transferable skills ex: high school/ college graduates or people looking for a better opportunity
Seasonal unemployment:
due to the time of the year, and the nature of the job
ex: lifeguards, construction workers, mall Santa Claus, Easter bunny, school bus drivers, even tourism
Structural unemployment:
changes in the structure of the labor force, which makes some skills obsolete
workers do not have transferable skills
ex: typewriter, vcr repairman
when laid off, you have to find another skill
Creative destruction: when one new job is created an old job is destroyed
Cyclical unemployment:
Unemployment that results from economic downturns such as recessions
as demand for goods and services falls, demand for labor falls and workers will be laid off
Full Employment or NRU:
natural rate of unemployment
employment should be 4-5 percent employment
suggested nru is 4-5 percent
Frictional + Structural Unemployment = NRU
there should be cyclical unemployment= bad, economy not doing well, contraction/recession
Okun"s law: for every 1 percent in which the actual unemployment rate exceeds the natural rate of unemployment it causes a 2% decline in RGDP
rule of 70: calculates the number of years that is required to double GDP
ex: if the annual inflation rate is 2%, how long will it take GDP to double
take the number 70/2 = 35 years
Population: the total amount of people in a country
Labor force: number of people in a country that is employed or unemployed
3 groups of people: employed, unemployed, and not in the labor force
Employed:
People who are 16 years of age and older who have a job
If you work at least 1 hour every 2 weeks you are considered to be employed
Unemployed:
People who are 16 years of age or older that do not have a job but they are actively searching for a job within the last 2 weeks
Not in the labor force:
ex: kids, full time student, retirees, disabled people, home-makers, mentally institutionalized people, incarcerated (prison or jail), military, discouraged workers (people who gave up)
types of unemployment: frictional, seasonal, structural, and cyclical
unemployment rate:
(the number of unemployed) / (total labor force [#of unemployed+#of employed] ) x100
Frictional unemployment: temporarily unemployed or in between jobs
workers are qualified, have transferable skills ex: high school/ college graduates or people looking for a better opportunity
Seasonal unemployment:
due to the time of the year, and the nature of the job
ex: lifeguards, construction workers, mall Santa Claus, Easter bunny, school bus drivers, even tourism
Structural unemployment:
changes in the structure of the labor force, which makes some skills obsolete
workers do not have transferable skills
ex: typewriter, vcr repairman
when laid off, you have to find another skill
Creative destruction: when one new job is created an old job is destroyed
Cyclical unemployment:
Unemployment that results from economic downturns such as recessions
as demand for goods and services falls, demand for labor falls and workers will be laid off
Full Employment or NRU:
natural rate of unemployment
employment should be 4-5 percent employment
suggested nru is 4-5 percent
Frictional + Structural Unemployment = NRU
there should be cyclical unemployment= bad, economy not doing well, contraction/recession
Okun"s law: for every 1 percent in which the actual unemployment rate exceeds the natural rate of unemployment it causes a 2% decline in RGDP
rule of 70: calculates the number of years that is required to double GDP
ex: if the annual inflation rate is 2%, how long will it take GDP to double
take the number 70/2 = 35 years
Very great notes! I like the use of the comic regarding unemployment as a fun visual for readers to see. However, I recommend including the formula for Okun's law (actual unemployment rate - NRU x 2), as well as an example problem so that it is clearer to understand. Additionally, I suggest utilizing bulleted points or bolded/underlined text. That way, the notes are more organized and easier for the eyes to distinguish between points.
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