Chapter 8 Notes - Vandan Desai ECON 102Principles of...

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Vandan Desai ECON 102—Principles of Macroeconomics 1 Chapter 8 —Unemployment and Employment (Lecture &otes) I. Unemployment and Other Labor Market Indicators A. Cyclic, Frictional, and Structural Unemployment i. Unemployment rate rises when the economy goes into recession and falls when the economy expands ii. Natural unemployment rate —the unemployment rate that exists when there is neither a recession nor a boom and real GDP is equal to potential GDP 1. Caused by combination of frictional and structural unemployment 2. Frictional unemployment —unemployment arising from normal turnover in the labor market, such as when people change occupations or locations, or are new entrants (most are short-lived ) 3. Structural unemployment —unemployment due to structural problems such as poor skills, longer-term changes in demand, or insufficient work incentives (usually unemployed for longer periods ) 4. Are gradual changes over time , not related to short-term fluctuations iii. Cyclic unemployment —unemployment due to a recession, when the rate of unemployment is above the natural rate of unemployment B. How Is Unemployment Measured? i. Current Population Survey —a monthly survey of a sample of 60,000 U.S. households done by the U.S. Census Bureau; it measures employment, unemployment, labor force, and other characteristics of the U.S. population ii. Labor force —all those who are either employed or unemployed 1. Unemployed —person who doesn’t have a job but is looking for work 2. Employed —person must have a job, either a job outside of home or a paid job inside the home Person with unpaid job at home is not counted as employed 3. Person not counted as either unemployed or employed is not in the labor force iii. Working-age population —persons over 16 years of age who are not in an institution such as a jail or hospital (in school, retired, or unpaid work at home)
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This note was uploaded on 10/31/2010 for the course ECON 201 taught by Professor Coomber during the Spring '08 term at Community College of Baltimore County.

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Chapter 8 Notes - Vandan Desai ECON 102Principles of...

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