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Principles of Economics- Mankiw (5th) 568

Principles of Economics- Mankiw (5th) 568 - 586 PA R T N I...

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586 PART NINE THE REAL ECONOMY IN THE LONG RUN program that financially assists the unemployed or because they are actually working and being paid “under the table.” It may be more realistic to view these individuals as out of the labor force or, in some cases, employed. On the other hand, some of those who report being out of the labor force may, in fact, want to work. These individuals may have tried to find a job but have given up after an unsuccessful search. Such individuals, called discouraged workers, do not show up in unemployment statistics, even though they are truly workers without jobs. According to most estimates, adding discouraged workers would increase the measured unemployment rate by about one-half of one percentage point. There is no easy way to fix the unemployment rate as reported by the BLS to make it a more reliable indicator of conditions in the labor market. In the end, it is best to view the reported unemployment rate as a useful but imperfect measure of joblessness.
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