UNEMPLOYMENT

Unemployment

Population

-the number of people in a country

Labor force

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

People who are employed...:

• are able and willing to work
• must be 16 years old or older
• must work at least one hour every two weeks                                                                                                                                                            People who are unemployed:
• are people who are 16 years of age or older that don't have a job

Unemployment

-the failure to use available resources

Underemployment

-is when you have the resources but aren't using them efficiently

the formula to find unemployment rate is:

# of unemployed/total labor force x 100

• total labor force = # of employed + # of unemployed
• the ideal unemployment rate is between 4-5%

The people who aren't in the labor force are...:

• students
• prisoners
• mental institution patients
• military
• people who are disabled 
• people who have given up looking for a job
• homemakers
• people who choose not to work
• retired people

The four types of unemployment are...:

Frictional employment 

-people are between jobs. 

-they are temporarily unemployed and have transferrable skills that can be transferred to the next position

-ex: high school or college graduates looking for a job, people who are fired looking for a job, and people who are looking for a better job

Seasonal employment 

-unemployment that is due to the time of the year and the nature of the job

-ex: lifeguards, construction workers, and Santa Claus impersonators

Structural employment 

-changes in the structure of the labor force make some skills obsolete

-workers don't have transferrable skills and these jobs will never come back

-ex: VCR repair person, high school dropout, and typewriter person. 

-workers have tolearn a new skill to get a job 

-permanent loss of these jobs is called creative destruction

Cyclical employment

-unemployment that results from economic dowfall such as recession

-as demand for goods and services decreases, demand for labor decrease as well and workers are fired or laid off

-ex: sales are down in Academy so they decide to close down some stores

Here are some keys points :) :

• Frictional and structural employment can't be avoided
• frictional + structural = natural rate of unemployment (NRU)
• NRU is the same thing as the ideal unemployment rate, which is 4-5%
• Full employment is when there is no cyclical unemployment

Okun's Law 

- a1% increase in the unemployment rate causes a 2% decline in real GDP

Unemployment is bad because the burden of unemployment isn't equally shared in society and it causes social unrest and is hard on individuals and families

Rule of 70

-calculates the approximate number of years required to double GDP

-the formula is:

number of years to double = 70/annual percentage growth rate

If you still don't understand, here are some vids 2 help you :) :

Unemployment rate: https://www.youtube.com/watch?v=uPRQnQxsL3E

Natural, cyclical, structural, and frictional unemployment rates:https://www.youtube.com/watch?v=S3QwMxRTPWM