- Unemployment: failure to use available resources (labor)
- Employed: includes those that are self employed
- Natural rate of unemployment (NRU)
- Structural + frictional unemployment
- Does not mean 0 unemployment
- Unemployed: New entrants, laid off, lost last job, quit last job
- Frictional
*Transitional/temporary/short term/searching or between jobs
*Signals new jobs are available and reflects freedom of chance
*Ex. People who have quit or have been fired, students out of college, people looking for a better job
- Cyclical
*Economic down turn in business cycle because of a deficient demand for goods/services (caused by a recession)
*If you loose a job due to a recession, you will get that job or another job again (jobs come back)
- Structural
*Deals with technology
*Reasons why it happens:
~automation: job may become obsolete due to changes in taste
~creative destruction: as jobs are created, others are lost
~change in skills
- Seasonal
*Depending on season or weather
*Ex. Santa, lifeguard, Easter bunny, construction workers
- Not in labor force: Disabled, armed forces, stay at home mother/father, retirees, those in mental institutions or prison, students
*Total labor force = (unemployed+employed)
* Rate>6% = bad
*Rate<6% = good
*Rate<4% = very good
Side Notes
- Okun's Law
- States that for every 1% unemployment above the NRU, a negative GDP gap will occur
- Unemployment burdens of unemployment
- Teens have the higher rates
- Blacks have higher rates than white
- Rates for males and females are comparable
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