Understanding Unemployment

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Play an AI-generated podcast conversation about this lesson
Download our mobile app to listen on the go
Get App

Questions and Answers

What are the primary economic consequences of unemployment?

  • Lost incomes, reduced production, and potential damage to human capital. (correct)
  • Greater efficiency in resource allocation and increased economic growth.
  • Increased government revenue and decreased public debt.
  • Increased investment in human capital and higher productivity.

Which of the following best describes the 'working-age population' as defined by the Current Population Survey?

  • People aged 16 years and older who are not in jail, hospital, or other institutions. (correct)
  • Citizens between the ages of 25 and 54 who have completed their formal education.
  • All residents of a country who are eligible to work, regardless of age or institutionalization.
  • Individuals aged 18 to 65 who are actively employed or seeking employment.

Which of the following criteria must be met for a person to be counted as unemployed?

  • They must be actively enrolled in a job training program.
  • They must be without work, have made specific efforts to find a job within the previous four weeks, or are waiting to be recalled to a job or start a new one within 30 days. (correct)
  • They must have been laid off from their previous job due to company downsizing.
  • They must be receiving unemployment benefits from the government.

In June 2014, the labor force was 156 million and 9.7 million people were unemployed. What was the unemployment rate?

<p>6.2% (D)</p> Signup and view all the answers

How is the employment-to-population ratio calculated?

<p>(Number of Employed People ÷ Working-Age Population) × 100 (D)</p> Signup and view all the answers

If a country's labor force is 156 million and the working-age population is 248 million, what is the labor force participation rate?

<p>63% (D)</p> Signup and view all the answers

Which of the following is true regarding the official unemployment rate?

<p>It excludes marginally attached workers and part-time workers who want full-time jobs. (B)</p> Signup and view all the answers

How are 'discouraged workers' classified in unemployment statistics?

<p>As part of the marginally attached workers and not included in the official unemployment rate. (D)</p> Signup and view all the answers

Which type of unemployment is considered the most costly?

<p>Long-term unemployment resulting from job loss (A)</p> Signup and view all the answers

Given a total population of 262.029 million, a labor force of 162.052 million, employed individuals totaling 155.175 million, and 6.877 million unemployed, what percentage of the population is out of the labor force?

<p>38.2% (A)</p> Signup and view all the answers

With 6.877 million unemployed and a total labor force of 162.052 million, what is the unemployment rate?

<p>4.2% (C)</p> Signup and view all the answers

Which type of unemployment arises from the normal turnover in the labor market, such as people searching for new jobs after the creation and destruction of jobs?

<p>Frictional unemployment (B)</p> Signup and view all the answers

What is structural unemployment?

<p>Unemployment due to a mismatch between workers' skills and available jobs. (A)</p> Signup and view all the answers

A worker is laid off during a recession but is rehired when the economy begins to recover. What type of unemployment did this worker experience?

<p>Cyclical unemployment (B)</p> Signup and view all the answers

Which of the following describes seasonal unemployment?

<p>Unemployment related to changes in weather or holiday seasons. (B)</p> Signup and view all the answers

What conditions define 'full employment'?

<p>When the unemployment rate equals the natural unemployment rate. (A)</p> Signup and view all the answers

Which factors can influence the natural unemployment rate?

<p>The age distribution of the population, the scale of structural change, real wage rates, and unemployment benefits (B)</p> Signup and view all the answers

What are some potential social effects of high unemployment?

<p>Increased crime rates and political unrest (D)</p> Signup and view all the answers

Which strategies can potentially help reduce unemployment?

<p>Promoting education, making job training accessible, creating microfinance programs, and investing in infrastructure (B)</p> Signup and view all the answers

How does prolonged unemployment affect a person's job prospects?

<p>It can permanently damage their job prospects by destroying human capital. (A)</p> Signup and view all the answers

How does the U.S. Bureau of Labor Statistics (BLS) view the official unemployment rate?

<p>As a correct measure of unemployment which is imperfect because it excludes marginally attached workers. (B)</p> Signup and view all the answers

Which of the following accurately calculates the labor force participation rate?

<p>(Labor force / Working-age population) * 100 (B)</p> Signup and view all the answers

What defines the term 'marginally attached worker'?

<p>Someone who is not working, but wants a job and has recently looked for work. (A)</p> Signup and view all the answers

What characterizes structural unemployment, and why does it typically last longer than frictional unemployment?

<p>It arises from technological advancements or shifts in industry that require workers to gain new skills or relocate, so new employment opportunities are not as quick. (C)</p> Signup and view all the answers

Which of the following statements correctly describes the relationship between recessions and unemployment rates?

<p>Unemployment rates tend to increase during recessions as companies lay off workers due to decreased demand. (C)</p> Signup and view all the answers

In a scenario where the labor force is 162.052 million and the employed population is 155.175 million, what formula accurately calculates the number of unemployed individuals?

<p>Unemployed = Labor Force - Employed (B)</p> Signup and view all the answers

How does an increase in unemployment benefits typically affect frictional unemployment?

<p>It can increase frictional unemployment because people may take longer to search for new jobs. (A)</p> Signup and view all the answers

What economic and social challenges are typically associated with elevated levels of unemployment?

<p>A decrease in aggregate demand and increased social issues (such as crime) (B)</p> Signup and view all the answers

In June 2014, the employment-to-population ratio was 59 percent. What does that mean?

<p>59 percent of the working-age population had jobs (C)</p> Signup and view all the answers

In June 2014, the labor force participation ratio was 62.9 percent. What does that mean?

<p>Means 62.9 people out of each 100 of the working-age people were in the labor force. (D)</p> Signup and view all the answers

What is the purpose of the unemployment rate?

<p>To measure the underutilization of labor resources (B)</p> Signup and view all the answers

Flashcards

Why is unemployment a problem?

When people want employment, they contribute to lost incomes and production.

How is the population divided?

Surveys divide the population into two groups: the working-age population and those too young to work or in institutional care.

What is the 'working-age population'?

The number of people aged 16 years and older who are not in jail, hospital, or some other institution.

What is the labor force?

The sum of employed and unemployed workers.

Signup and view all the flashcards

Who counts as unemployed?

Without work and has made efforts to find a job within the previous four weeks, is waiting to be called back to a job, or waiting to start a job within 30 days.

Signup and view all the flashcards

What is the unemployment rate?

The percentage of the labor force that is unemployed.

Signup and view all the flashcards

What is the employment-to-population ratio?

The percentage of the working-age population who have jobs.

Signup and view all the flashcards

What is the labor force participation rate?

The percentage of the working-age population who are members of the labor force.

Signup and view all the flashcards

What is a marginally attached worker?

Someone neither working nor looking for work but indicates they want and are available for a job and has looked for work sometime in the recent past.

Signup and view all the flashcards

Discouraged worker

A marginally attached worker who has stopped looking for a job because of repeated failure to find one.

Signup and view all the flashcards

Frictional unemployment

Unemployment that arises from normal labor market turnover.

Signup and view all the flashcards

What is structural unemployment?

Unemployment created by changes in technology and foreign competition.

Signup and view all the flashcards

Cyclical Unemployment

The higher than normal unemployment at a business cycle trough and lower than normal unemployment at a business cycle peak.

Signup and view all the flashcards

What is seasonal unemployment?

When people who work in seasonal jobs become unemployed when demand for labor decreases.

Signup and view all the flashcards

What is 'natural' unemployment?

The unemployment that arises from frictions and structural change when there is no cyclical unemployment.

Signup and view all the flashcards

What is 'full employment'?

Situation in which the unemployment rate equals the natural unemployment rate.

Signup and view all the flashcards

Study Notes

  • The chapter discusses monitoring jobs and understanding unemployment.
  • It explains unemployment as a problem and how to measure the unemployment rate.
  • It also explains why unemployment occurs and why it's present even at full employment.

Employment and Unemployment in 2014

  • The class of 2014 faced a challenging job market.
  • In July 2014, 10 million Americans sought employment without success.
  • An additional 8 million had transitioned to part-time positions after ceasing their search for full-time work.
  • The U.S. economy generated many jobs; 139 million people were employed during the 2009 recession.
  • Population growth has recently outpaced job creation, exacerbating unemployment.

Why Unemployment Is a Problem

  • Unemployment results in lost incomes and production and the loss of human capital.
  • The absence of income is devastating, even with employment benefits which don't fully replace lost wages and aren't universally received.
  • Extended unemployment damages job prospects by eroding human capital.

Current Population Survey

  • The population is divided into the working-age population 16+ who are not institutionalized.
  • The population is also divided into those too young to work (<16) or in institutional care.
  • The working-age population is divided into those in the labor force and those not in the labor force.
  • The labor force comprises employed and unemployed workers.
  • An unemployed person must be without work but has looked for a job in the past four weeks.
  • Also considered unemployed are those waiting to be recalled from a layoff or scheduled to start a new job within 30 days.
  • In June 2014, the population was 318 million.
  • In June 2014, the working-age population was 248 million.
  • In June 2014, the labor force was 156 million.
  • In June 2014, the employed numbered 146.3 million.
  • In June 2014, the unemployed numbered 9.7 million.

Three Labor Market Indicators

  • Unemployment rate
  • Employment-to-population ratio
  • Labor force participation rate

The Unemployment Rate

  • The unemployment rate measures the percentage of the labor force that is unemployed.
  • The unemployment rate is calculated as the number of unemployed people divided by the labor force, then multiplied by 100.
  • In June 2014, the labor force was 156 million and 9.7 million were unemployed and the unemployment rate was 6.2%.
  • The unemployment rate typically rises during recessions and peaks at the end of recessions.

The Employment-to-Population Ratio

  • The employment-to-population ratio measures the percentage of the working-age population with jobs.
  • The employment-to-population ratio is calculated as the number of employed people divided by the working-age population, then multiplied by 100.
  • In June 2014, 146.3 million people were employed and the working-age population was 248 million, and the employment-to-population ratio was 59%.

The Labor Force Participation Rate

  • The labor force participation rate represents the percentage of the working-age population who are members of the labor force.
  • The labor force participation rate is calculated as the labor force divided by the working-age population, then multiplied by 100.
  • In June 2014, the labor force was 156 million and the working-age population was 248 million, resulting in a labor force participation rate of 62.9%.
  • This signifies 59 employed people per 100 of the population.
  • The labor force participation rate and employment-to-population ratio both generally increased until 2000 and have decreased since.

Other Definitions of Unemployment

  • The unemployment rate aims to measure the underutilization of labor resources.
  • The Bureau of Labor Statistics (BLS) believes the unemployment rate provides an accurate measure.
  • The official measure excludes marginally attached workers and part-time workers seeking full-time employment.
  • A marginally attached worker is not working or actively seeking work but has indicated availability and desire for a job in the recent past.
  • A discouraged worker, a type of marginally attached worker, has ceased job searching due to repeated failures.

Part-Time Workers

  • While some part-time workers prefer their status, some would rather have full-time positions.
  • These workers are classified as economic part-time workers in statistics, reflecting partial unemployment.

Costly Unemployment

  • Although all unemployment is costly, long-term unemployment resulting from job loss is the most detrimental.

Measures of Unemployment

  • Total population: 262.029 million
  • In the labor force: 162.052 million (61.8%)
  • Employed: 155.175 million
  • Unemployed: 6.877 million
  • Out of the labor force: 99.977 million (38.2%)

Calculating the Percentage in the Labor Force

  • Divide the number in the labor force (162.052 million) by the total adult population (262.029 million).
  • Multiply the result by 100 to get the percentage such as 162.052 /262.029 = 0.6184 = 61.84%.

Calculating the Percentage Out of the Labor Force

  • Divide the number out of the labor force (99.977 million) by the total adult population (262.029 million).
  • Multiply by 100 to obtain the percentage such as 99.977 / 262.029 =0.3815 =38.2%.

Calculating the Unemployment Rate

  • Divide the number of unemployed people (6.877 million) by the total labor force (162.052 million).
  • Multiply the result by 100 to obtain the rate such as 6.877 / 162.052 = 0.0416 = 4.2%.

Types of Unemployment

  • Frictional unemployment arises from normal labor market turnover.
  • Structural unemployment occurs due to technological advancements or foreign competition altering job skill or location requirements.
  • Cyclical unemployment is influenced by business cycle fluctuations, increasing during troughs and decreasing during peaks.
  • Seasonal unemployment affects those in seasonal jobs when demand decreases, typically at specific times of the year or with weather changes.

Natural Unemployment

  • Natural unemployment occurs solely from frictional and structural shifts when cyclical unemployment is absent.
  • It is all frictional and structural unemployment.
  • The natural unemployment rate is a percentage of the labor force.

Full Employment

  • Full employment is when the unemployment rate equals the natural unemployment rate.
  • At full employment, there is no cyclical unemployment, and all unemployment is frictional and structural.
  • Reducing the gap between natural and cyclical unemployment leads to full employment.
  • The natural unemployment rate varies due to factors like the age distribution of the population, the scale of structural change, the real wage rate and unemployment benefits.

Effects of Unemployment

  • Economic effects: negatively impacting income creation, decreasing aggregate demand, and lowering the standard of living.
  • Social effects: increasing the crime rate
  • Political effects: harming political stability and potentially causing riots and political unrest.

Solving the Unemployment Problem

  • Promote education for everyone.
  • Make job training more accessible.
  • Create microfinance programs.
  • Increase jobs in labor-intensive industries.
  • Invest in infrastructure.
  • Reduce barriers to unemployment insurance.
  • Create affordable housing.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Unemployment: Labor Market and Indicators

More Like This

Use Quizgecko on...
Open
Browser
Browser