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Chapter 6: Jobs and Unemployment

by: alex formichella

Chapter 6: Jobs and Unemployment econ 222

Marketplace > University of South Carolina > Macro Economics > econ 222 > Chapter 6 Jobs and Unemployment
alex formichella

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All notes on Chapter 6!
Principles of Macroeconomics
Pattama Shimpalee
Class Notes
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This 2 page Class Notes was uploaded by alex formichella on Friday September 16, 2016. The Class Notes belongs to econ 222 at University of South Carolina taught by Pattama Shimpalee in Fall 2016. Since its upload, it has received 5 views. For similar materials see Principles of Macroeconomics in Macro Economics at University of South Carolina.


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Date Created: 09/16/16
Full time workers​-People who usually work 35 or more hours a week Part-time workers-​ People who work less than 35 hours a week Labor Market Indicators ● The unemployment is often used in the media (and by the government) is known as the “U-3 rate” ○ Marginally Attached workers ■ Jobless ■ Available and willing to work ■ Not actively looking for work (Has not looked for work in the past 4 weeks) ■ This class also includes “discouraged workers” who have completely given up on finding a job because they feel that they just won’t find one ○ Involuntary part-time workers (Not included in U-3) ■ Also called underemployed part-time workers, unhappy part-time workers, part-time workers for economic reasons ■ Works less than 35 hours per week but would like to work full time ○ If those two were added the U-3 Rate would increase ● U-6 = (Unemp + Marg + Part) / (Emp + Unemp +Marg) * 100 ○ Broadest measure of total unemployment in the economy ● U-3 = Unemp / (Emp + Unemp) 3 Types of Unemployment ● Frictional ○ Result of normal labor market turnover ○ the unemployment which exists in any economy due to people being in the process of moving from one job to another. ○ Looking for a better one ○ FU rate = # of FU / # of LF *100 ○ Falls in recessions and increases in expansions ■ Put off job search and go back to something else. ○ Between 2-7% ● Structural ○ Is the result of technological change or foreign competition ○ May occur when companies use higher technology for better output in the economy ● Cyclical ○ Is unemployment that occurs when there is fluctuations in real GDP ○ Caused during recessions ○ Increases during recessions ○ Falls in expansions ● Natural rate of unemployment ○ Frictional Unemployment rate + Structural unemployment rate ○ Natural unemployment rate is the nature unemployment as a percentage of the labor force (5%) ○ When the the actual U-Rate is above it means the economy is in a recession ○ When it is below it is in economic expansion ● Actual U-Rate = FU rate + SU rate + CU rate ● CU Rate = (Actual U-rate) - (Natural rate of unemployment) ● Full employment = Actual U-rate = Natural rate of unemployment ○ Also when real GDP = Potential GDP ● Output Gap (GDP Gap) = Y-Y(p) ○ Recessionary gap (Y<Y(p)) ○ Expansion (Y>(Y(p)) ● During a recession, the unemployment rate exceeds the natural unemployment rate in part (A), and…. The costs of unemployment--->Look at Powerpoint


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