CH8 - 9/11/2009 Learning Objective 8.1 Current Population...

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9/11/2009 1 Unemployment and Inflation 1 Each month, the US Bureau of the Census conducts the Current Population Survey to collect data needed to compute the unemployment rate ( http://www.bls.gov/CPS/ ) Interview about the employment status of every adult (aged 16 or older) in a sample of 60,000 households, chosen to represent the whole population Learning Objective 8.1 USA: Current Population Survey (The Household Survey) Calculate the monthly unemployment rate by these data 2 Labor force vs not in the labor force Labor force The sum of employed and unemployed workers in the economy (L = E+U) Employed (E): those who worked during the week before the survey or Learning Objective 8.1 during the week before the survey or if they were temporarily away from their job Unemployed (U): those who did not work in the previous week but were available for work and had actively looked for work at some time during the previous 4 weeks 3 People who do not have a job and who are not actively looking for a job are classified as not in the labor force. Not available for work: Retirees, homemakers, full-time students, people who are in prison, mental hospitals, etc. Discouraged workers: People who are available for work Learning Objective 8.1 Current Population Survey (The Household Survey) Discouraged workers: People who are available for work but have not looked for a job during the previous four weeks because they believe no jobs are available for them. Others: Available for work but have not looked for work lately for reasons such as childcare responsibilities. 4 Learning Objective 8.1 The Household Survey FIGURE 8-1 The Employment Status of the Civilian Working-Age Population, April 2007 5 100 Number of unemployed Unemployment rate Labor force  Learning Objective 8.1 • The unemployment rate measures the percentage of the labor force that is unemployed. The Household Survey 6 • The labor force participation rate measures the percentage of the working-age population in the labor force. 100 Labor force Labor force participation rate Working-age population
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9/11/2009 2 Example: In “New City” Adult population: 500,000 Employed: 380,000 Unemployed: 20,000 Learning Objective 8.1 Size of labor force? Unemployment rate? Labor force participation rate? 7 Solved Problem 8-1 What Happens if You Include the Military? Learning Objective 8.1 In the BLS household survey, people on active military service are not included in the totals for employment, the labor force, or the working-age population. Suppose people in the military were included in these categories. How do the ratios change? 100 Number of unemployed Labor force 100 Labor force Working-age population 8 Although the BLS reports the unemployment rate measured to the tenth of a percentage point, it is not a perfect measure of the current state of joblessness in the economy.
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This note was uploaded on 02/22/2010 for the course FBE ECON1002 taught by Professor Rao during the Spring '10 term at HKU.

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CH8 - 9/11/2009 Learning Objective 8.1 Current Population...

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