Chapter_8_Notes - Chapter 8 Notes Chapter 8 Unemployment...

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Chapter 8 Notes Chapter 8 Unemployment and Inflation GDP is one measurement that is used gauge overall economic performance. Two other important macroeconomic variables are the unemployment rate and the inflation rate. This chapter further explores the measurements of important macroeconomic concepts by explaining unemployment and inflation, then looking at how they are measured. Measuring the Unemployment Rate and the Labor Force Participation Rate Every month the Department of Labor issues an estimate of the last month’s unemployment rate. This measure has serious economic and political implications. The Household Survey Each month, the US Bureau of the Census conducts the Current Population Survey for the Bureau of Labor Statistics (BLS). The Current Population Survey interviews a sample of households about the employment status of everyone in the household that is 16 years or older. This sample of households is meant to represent the US population. ( ) Employed - worked during week before or temporarily away Unemployed - did not work but were a variable & actively looked for work in the previously 4 weeks The sum of unemployed and employed workers in the economy is called the labor force . People who are classified as “not in the labor force” are people who do not have a job and are not actively looking for a job. 1
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Chapter 8 Notes Some obvious examples are retirees, homemakers, prisoners, etc. But people, who are available for work and have looked for a job in the past 12 months, but not during the previous four weeks, are not considered to be a part of the labor force. Others may have not looked for work because of transportation problems or childcare responsibilities. Another group of people may not look for work even though they are available because they believe there are no jobs available for them. These are called discouraged workers. Fulltime students, active military service The unemployment rate is the percentage of the labor force that is not employed. Finding the employment rate is done by using the simple equation [# of unemployed / labor force] x 100 Some are not only interested in what percentage of the labor force is working, but what percentage of the entire population is in the labor force itself. The labor force participation (LFP) rate is the percentage of the working-age population (16 and above?) in the labor force. It is found by using the simple equation [LF / working age population] x 100 = LFP The LFP rate is interesting because it helps determine the amount of labor that will be available to the economy from the population. Problems 1. Difficulties in distinguishing between the unemployed and people who are not in the labor force. During a recession, there is usually an increase in discouraged workers because many
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This note was uploaded on 04/27/2010 for the course ECON 2010 taught by Professor Roussel during the Spring '08 term at LSU.

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Chapter_8_Notes - Chapter 8 Notes Chapter 8 Unemployment...

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