Chapter 8

Chapter 8 - Chapter 8 Measuring the Unemployment Rate and...

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Chapter 8 13:49 Measuring the Unemployment Rate and the Labor Force Participation Rate The Household Survey Each month the US bureau of the Census conducts the Current Population Survey (the Household Survey) to collect data needed to compute the unemployment rate o Interviews 60,000 households o Checks the employment status of everyone who is 16 years or older Employed o They work during the week before the survery o They were temporarily away from job due to illness, on vacation, on strike, etc Unemployed o Did not work in the previous week o Are available for work and have been looking for work in the past four weeks Labor force The sum of employed and unemployed workers in the economy. Unemployment rate The percentage of the labor force that is unemployed. People who don’t have a job and are not actively looking for a job are not in the labor force o Retirees o Homemakers, full time students, military sere, in prison, mental hospitals o People who are available for work and who have actively looked for a job during the last year but who have not looked during the previous four weeks Discouraged workers People who are available for work, but who have not looked for a job during the previous four weeks because they believe no jobs are available for them. The unemployment rate measures the percentage of the labor force that is unemployed: o (Numbers of unemployed/labor force) x 100
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The labor force participation rate measures the percentage of the working-age population that is in the labor force: o (Labor force/working-age population) X 100 Problems with Measuring the Unemployment Rate Distinguishing between the unemployed and people who are not in the labor force During economic recession, an increase in discouraged workers usually occurs because they have big problems looking for a job and so they have actively stopped looking o Cuz they are not counted as unemployed, the unemployment rate is understated Doesn’t verify the responses of people included in the survey o Some people lie about actively looking for a job Want to remain eligible for gov funding Some people might be engaged in illegal activities It is a far from exact measure of joblessness in the economy Trends in the Labor Force Participation Important because t determines the amount of labor that will be available to the economy from a given pop The higher the participation rate the more labor will be available and the higher a country’s GDP Participation rate of adult males has fallen, while women have increased o Decrease in men Older men retiring earlier Younger men remaining in school longer o Increase in women Changing social attitudes Federal legislation outlawing discrimination
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Increasing wages in women Typical family having fewer children Unemployment Rates for Demographic Groups Different groups in the population have very different unemployment rates
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Chapter 8 - Chapter 8 Measuring the Unemployment Rate and...

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