Lecture_9 - Unemployment IDENTIFYING UNEMPLOYMENT How Is...

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Unemployment IDENTIFYING UNEMPLOYMENT 0. How Is Unemployment Measured? 0. Categories of Unemployment 0. The problem of unemployment is usually divided into two categories, the long-run problem and the short-run problem. 1. The natural rate of unemployment 2. The cyclical rate of unemployment How is Unemployment Measured? 1. Natural Rate of Unemployment 0. The natural rate of unemployment is unemployment that does not go away on its own even in the long run. 1. It is the amount of unemployment that the economy normally experiences. How Is Unemployment Measured? 2. Cyclical Unemployment 2. Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate. 3. It is associated with with short-term ups and downs of the business cycle. How Is Unemployment Measured? 3. Describing Unemployment: Three Basic Questions 4. How does government measure the economy’s rate of unemployment? 5. What problems arise in interpreting the unemployment data? 6. How long are the unemployed typically without work? How Is Unemployment Measured? 4. Unemployment is measured by the Bureau of Labor Statistics (BLS). 5. It surveys 60,000 randomly selected households every month. 6. The survey is called the Current Population Survey. How Is Unemployment Measured? 7. Based on the answers to the survey questions, the BLS places each adult into one of three categories:
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1. Employed 2. Unemployed 3. Not in the labor force How Is Unemployment Measured? 8. Employed vs. unemployed 0. The BLS considers a person an adult if he or she is over 16 years old. 1. A person is considered employed if he or she has spent some of the previous week working at a paid job. 2. A person is unemployed if he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job. 3. A person who fits neither of these categories, such as a full-time student, homemaker, or retiree, is not in the labor force. How Is Unemployment Measured? 9. Labor Force 4. The labor force is the total number of workers, including both the employed and the unemployed. 5. The BLS defines the labor force as the sum of the employed and the unemployed. Figure 1 The Breakdown of the Population in 2004 How Is Unemployment Measured? 10.The unemployment rate is calculated as the percentage of the labor force that is unemployed. How Is Unemployment Measured? 11.The labor-force participation rate is the percentage of the adult population that is in the labor force. Figure 2 Unemployment Rate Since 1960 Michigan’s Unemployment Rate Table 1 The Labor-Market Experiences of Various Demographic Groups Figure 3 Labor Force Participation Rates for Men and Women Since 1950 Does the Unemployment Rate Measure What We Want It To? 12.It is difficult to distinguish between a person who is
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This note was uploaded on 05/04/2009 for the course ECON 202 taught by Professor Amsler during the Spring '08 term at Michigan State University.

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Lecture_9 - Unemployment IDENTIFYING UNEMPLOYMENT How Is...

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