Chapter 7 Lecture: Unemployment
Chapter 7 Lecture: Unemployment ECON 2305 - 001
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This 5 page Class Notes was uploaded by DulyNoted on Saturday October 3, 2015. The Class Notes belongs to ECON 2305 - 001 at University of Texas at Arlington taught by Ronnie W Liggett in Summer 2015. Since its upload, it has received 190 views. For similar materials see PRINCIPLES OF MACROECONOMICS in Economcs at University of Texas at Arlington.
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Date Created: 10/03/15
ECON 2305 Principles of Macroeconomics Friday October 2 2015 Chapter 7 Unemployment The Labor Force Individuals over the age of 16 Currently employed or actively looking to be employed Noninstitutionalized Prison Military The Four Major Types of Unemployment 1 Fractional Voluntary unemployment between jobs Switching jobs for whatever reason Example College graduates searching for a job 2 Structural The result of needing to change jobs More serious than Fractional Typically forced individual to quotretrain reeducate andor quotrelocatequot Job skills do not line up with the demand Example Having to move across country for betterjob opportunities Returning to school to obtain new knowledge in your field II I 3 Cyclical Flows identical to the business cycle Employment decreases with recession and increases with economic growth BUSINESS CYCLE Graph from in class lecture 4 Seasonal Certain jobs of the year jobs to not exist Not the most severe form of unemployment Example Seasonal jobs in retail Recession Two consecutive quarters of a downfall in GDP Depression occurs when that downfall continues Has typically occurred every five to six years There have been 11 in the past 60 years since 1950 Graph from in class lecture The shaded vertical lines indicate time of recession NAIRU The NonAccelerating Inflation Rate of Unemployment How fast the economy can grow without pushing prices up to where adjustment is not possible Civilian Unemplnvrnent Rate Natural Rate nf Unemplnvrnent ShunTerm 11 7 1 777 h Percent a1 l l FFJ a ll 19H 1989 1999 mm 2910 Shaded areaa indicate US reeeaaiena 2015 reaearchatlouiaf39edprg Special Employee Types The PartTime worker Works 35 hours or less Still considered employed by Labor Force definition Does not lower the employment rate but does not really help economy Marqinally attachedDiscouraqed Individual has given up looking for a job Barelynot considered part of the labor force Not counted in most official unemployment rates Influences the appearance and interpretation of unemployment statistics Unemployment Costs Lost Output People don t work so they can t produce Includes services as well Con derPPC Erosion of skills overtime Psychological Mental Impact on those unemployed Example Stressed depression Stress Induced Illnesses Labor Force Participation Rate The proportion of noninstitutionalized working ageindividuals who are employed or seeking employment Formula How many are in labor force nominator Total 16 non institutionalized population denominator Civilian Labor Force Participation Rate Participation Rate of over 65 with no disability more elderly employed people are unable to retire due to cost of livingdesire to stay active people are living longer and therefor working longer Participation of ages 1619 Less teenagers are working Adults are having to work jobs intended for teenagers No room in workforce for young people Discouraged Workers Those who have stopped looking for a job because they are convinced they will not find a suitable one Subset of larger group known as quotMarginally Attached Workers Why not provide job losers with unemployment benefits indefinitely When the government provides unemployment benefits to unemployed individuals it reduces the incentive for them to search for a job seriously How does the existence of discouraged workers bias the unemployment rate It makes the rate appear lower than what the rate really is
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