Unemployment

Unemployment - is the percentage of people who don't have jobs, but are in the labor force

Labor Force - is the number of people in a country that are classified as either employed or unemployed.

Not in The Labor Force

1. kids
2. military personnel
3. mentally insane
4. prison
5. retired
6. stay at home parents
7. discouraged (homeless, lazy, try to get a job but are either under or over qualified, people who stopped looking for jobs)

Unemployment Rate Equation

# of unemployed

-------------------------------------- x 100

# Of unemployed + employed 

Labor force = # of unemployed + of employed


Types Of Unemployed

Frictional

• Between Jobs
• Quit Job for a better job
• Graduated from college and looking for one
• actively looking for a job

Structural 

• associated with a lack of skills of a declining industry
• Ex: High School drop out cant read or write 
• Technology changes

Seasonal 

• School bus drivers
• Santa, Easter Bunny
• Construction Workers
• Jobs that are done during a certain season of a year

Cyclical

• associated with down terms in the business cycle, had for society and individuals
• trough, then cyclical plays

What is full employment ???

Occurs when there is no cyclical employment in the economy

(Natural rate of unemployment -NRU) 4%-5%

Why is Unemployment bad?

"There is not enough consumption" GDP

"it creates to much poverty"

" too much government assistance"

why is Unemployment good?

less pressure to raise waged

more workers available for future expansion

OKUN'S Law

For every 1 percent of unemployment above the NRU (Natural Rate of Unemployment) causes a 2% decline in Real GDP