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Unemployment
chapter 14 of the econ book
| Term | Definition |
|---|---|
| unemployed | Persons 16 and older are considered unemployed if they have actively searched for work in the last 4 weeks but are not currently employed |
| employed | The employed are those who have worked at least one hour in the previous two weeks |
| labor force | The labor force is the number of employed persons plus the number of unemployed persons |
| unemployment rate | The unemployment rate is a percentage of the labor force that is not currently employed; examples: full-time students, the retired, stay at home parents, the disabled, the institutionalized |
| labor force participation rate | The labor force participation rate is the percentage of the working age population classified as either employed or unemployed |
| unemployment-to-population ratio | The unemployment-to-population ratio is the percentage of the working age population that is classified as employed |
| marginally attached workers | Marginally attached workers are ready and available to work, who have conducted a job search within the past twelve months, but not the past four weeks |
| discouraged workers | Discouraged workers are the people who have given up the job search in frustration; they are unemployed generally, but the official unemployment rate does not reflect their numbers |
| U1 | The unemployment rate that only includes people unemployed fifteen weeks or more |
| U2 | The unemployment rate that only includes people who have lost a job as opposed to those who have quit or those who have entered/re-entered the job force |
| U3 | The official unemployment rate |
| U4 | The unemployment rate that adds discouraged workers to the official unemployment rate |
| U5 | The unemployment rate that includes all marginally attached workers |
| U6 | The unemployment rate that includes all of the above plus those who are employed part-time because of economic reasons |
| frictional unemployment | Frictional unemployment occurs when people voluntarily enter the labor force, or when they are between jobs |
| structural unemployment | Structural unemployment occurs when job seekers' skill sets are not in demand because of geography or obsolescence |
| creative destruction | As innovation occurs, old technologies and industries are destroyed, which frees up the resources for the new technology and its industries; structural unemployment is often the outcome of this |
| efficiency wages | Efficiency wages are wages that exceed the equilibrium market wage |
| cyclical unemployment | Cyclical unemployment occurs because of contractions in the business cycle |
| full employment | Full employment occurs when cyclical unemployment is not present in the economy |
| natural rate of unemployment | There is a level of unemployment that the economy maintains independent of the inflation rate; the idea is that left alone, the economy will maintain full employment and experience the natural rate of unemployment most of the time |
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