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by: Harley

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This 3 page Class Notes was uploaded by Harley on Friday April 22, 2016. The Class Notes belongs to at Arizona State University taught by in Summer 2015. Since its upload, it has received 6 views.


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Date Created: 04/22/16
Econ  201:  Week  13     Unemployment       Labor  Force  Statistics   • Created  by  the  BLS  (Bureau  of  Labor  Statistics)  in  the  U.S.  Department  of  Labor   • Based  on  regular  survey  submitted  from  60,000  households   • Based  on  “adult  population”-­‐  16  years  and  older   o Disincluding:  military,  institutionalized,  incarcerated,  minors     Population  divided  into  3  groups:  by  BLS   1. Employed-­‐  Paid  employer,  self-­‐employed,  and  unpaid  workers  in  a  family   business   2. Unemployed-­‐  Non-­‐working  people  that  have  been  looking  for  work  the  past  4   weeks   3. Not  in  the  Labor  Force-­‐  Everyone  else  (stay  at  home  moms,  full  time  students,   retires)                                                     Labor  Force   • All  people  capable  of  working  (whether  currently  working  or  not)   o Working:  Employed   o Actively  looking  for  work:  Unemployed    Civilian  Adult  Population                                      Labor  Force                        Non-­‐Labor  Force                                                                                                        Employed                    Unemployed       • Unemployment  Rate   o Percentage  of  unemployment  in  the  Labor  Force   o Also  called  U-­‐Rate   § =    100  *  (#  unemployed/  labor  force)     • Labor  Force  Participation  Rate   o Percentage  of  the  Adult  Population  in  the  Labor  Force     § =    100  *  (labor  force/  adult  population     Understanding  Unemployment   • Categorized  by  its  characteristics  and  duration   o Not  always  the  same   o Basic  truth:  there’s  always  some  U   • The  natural  rate  of  U   o The  normal  rate  of  unemployment  around  the  actual  unemployment  rate   fluctuates   § Made  up  of  frictional  and  structural  unemployment     § The  long  run  “average”   • Unemployment  Insurance:     o Government  program  that  provides  funding  to  unemployed  workers   § Benefits:  Reduce  income  uncertainty;  increases  search  time;  increases   possibility  of  job  that  is  a  good  fit,  this  increasing  productivity       § Costs:  Increases  frictional  unemployment       Explaining  Natural  Rates  of  U   • Frictional  Unemployment:   o When  workers  are  searching  for  a  job  that  best  suits  their  skills/taste   o Short-­‐term  in  most  cases   • Structural  Unemployment:   o The  skills  of  the  worker  aren’t  “valued”  by  the  market   o Occurs  when  there  aren’t  enough  jobs  in  the  market   § Can  be  long-­‐term   § Can  result  from  “sticky  wages”       W 1:  actual  wage   Explaining  Structural  U:  Policy   Occurs  when  wages  are  above  equilibrium     W eqm   1. Min  Wage  Laws:  Price  floor  (mostly  effects  teen  employment)   2. Unions:  Worker  association;  collective  bargaining  w/     employers  over  wages,  benefits,  and  working  conditions     3. Efficiency  Wages:  Firms  voluntarily  pay  higher  than     equilibrium  wages  to  boost  worker  productivity       Cyclical  Unemployment   • The  deviation  of  unemployment  from  its  natural  rate   • Associated  with  the  business  cycles:  short-­‐run   • Result  of  deficient  demand     Labor  Market  Statistics:  Policy   • The  Official  U  Rate  (U-­‐3)  and  others:  published  by  BLS   o Statistics  based  on  demographic  information   o Measured  the  length  of  U   • Data  shows  drastically  different  labor  market  experiences  for  different  groups  (age,   race,  etc.)   • Trends  help  policy  makers  make  better  polices   o Caveat:  Trends  can  inform,  even  if  data  flawed       Types  of  Unemployed  People   • Marginally  Attached:  person  is  neither  working  nor  looking  for  work;  person   wants  to  work,  is  available,  and  has  looked  in  the  past  2  months.  Is  not  included  in  U.   • Discouraged  Workers:  person  would  like  to  work,  but  has  stopped  looking   because  of  a,  “given  up  on  the  job  market”  related  reason.  Identified  as  “Not  in  the   Labor  Force.”   • Underemployment:  person  is  working  below  their  skill  level.  U-­‐rate  fails  to  show   economy  failure.            


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