Econ Chapter 7 - Econ Chapter 7 Unemployment the total...

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Econ Chapter 7 Unemployment: the total number of adults, who are willing and able to work and who are actively looking for work but have not found a job. Creates cost to the entire economy in terms of loss of output To calculate the unemployment rate, we divide the number of unemployed by the number of people in the labor force and multiply by 100 If the number of departures and acquisitions stay the same the unemployment rate stays the same The number of unemployed is some numver at any point in time. It is a STOCK of individuals who do not have a job but are looking for one. The same is true for the number of employed. The number of people departing jobs, wheather voluntarily or not is a flow, as is the number of people acquiring jobs. Catigories of unemployed people: 1. job loser: employment was involuntarily terminated or who was laid off: 40-60% 2. reentrant: worked a full time job before but has been out of the labor force: 20- 30% 3. job leaver: voluntarily ended employment: less than 10% 4. new entrant: never worked a full time job before: 15% Duration of unemployment: more than 1/3 of people that lose their jobs find one by the end of the month, 1/3 find one in 2 months, 1/6 are still unemployed after 6 months. Discouraged workers: individuals who have stopped looking for a job because they are convinced that they will not find a suitable one. They believe the labor force has little to offer them. Aka “ hidden unemployed”. People that work part time but could work part time can be called semi-hidden workers. Labor force participation rate: the way in which we difine unemployment and membership in the labor force will affect this. It is defined as the proportion of noninstitutionalized working age individuals who are employed or seeking employment.
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