Unemployment Unit 2 ¯\_(ツ)_/¯

February 4, 2016 

Unemployment

: the failure to use available resources particularly labor to produce desired goods and services 

Underemployment: we are not using it to the best of its ability 

Labor force above 16 hrs of age  Able and willing to work

Not found in the labor force People in the military  Mental institutions Jail or prison  Retired  Students Homemakers People who are not looking for a job

Unemployment rate: 

• 4 to 5% = full employment or natural rate of unemployed (NRU)
• # of unemployed / (# of employed + of unemployed) = *100 

Types of unemployment

1. Frictional: people who are searching for a job, temporarily unemployed, or in between jobs (have transferable skills) 

• High School  or college graduate looking for a job 
• Someone who leaves their job looking for a better position 

2. Structural unemployment: changes in the structure of the labor force make some skills obsolete (workers do not have transferable skills) 

• VCR repair 
• NASA workers

(Frictional + structural = the natural rate of unemployment) 

3. Seasonal unemployment: due to the time of year and the nature of the job

• life guard 
• Santa/ Easter bunny impersonators
• School bus drivers 
• Construction workers 

4. Cyclical unemployment: unemployment that results from economic downturns

• as demands for goods and services fall demand for labor falls this workers are laid off 

Full employment means no cyclical unemployment