Chapter 8 Econ 2-3

Chapter 8 Econ 2-3 - 8/25/2010 Chapter 8 Unemployment and...

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8/25/2010 1 Chapter 8 Unemployment and Inflation Measuring Unemployment ± “Household Survey” The Bureau of Labor Statistics (BLS) surveys 60 000 ho seholds e er month Each ad lt (aged 16 or older) into Unemployment 60,000 households every month. Each adult (aged 16 or older) into one of three categories: ± The Labor Force is the number of ± Who is not in the labor force?
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8/25/2010 2 Measuring the Unemployment Rate and the Labor Force Participation Rate The Household Survey The Employment Status of the Civilian Working-Age Population, July 2009 Note that some people 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. These people are called ± The unemployment rate measures the percentage of the labor force that is unemployed. The labor force participation rate measures the percentage of the working-age population in the labor force. 100 Number of unemployed Unemployment rate Labor force ×= 100 Labor force Labor force participation rate Working-age population
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8/25/2010 3 Numerical example: “Nelsonville” ± Population (adult) 400,000 ± Employed 220,000 ± Unemployed 30,000 ± Size of Labor Force? ± Unemployment Rate? ± Labor Force Participation Rate? Problems Measuring Unemployment ± Problems causing measured unemployment to understate actual joblessness. ² Discouraged workers ² Part-time workers ± Problems causing measured unemployment to overstate actual joblessness. ² People who falsely claim to be “actively looking” for work ² People employed in illegal industries often report themselves as unemployed. ± Next we look at trends in the real world data:
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8/25/2010 4 Trends in Labor Force Participation Since 1948
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8/25/2010 5 Another Measure of Employment: The “Establishment Survey” (a.k.a. the “payroll survey”) ± Samples 300,000 business establishments each month to see number of people on the payrolls of these businesses ² Strengths : ² Weaknesses:
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8/25/2010 6 Labor market “churn” ± Each year millions of jobs are created and destroyed in our economy. ² Jobs created ² Jobs destroyed ± When the BLS announces increases/decreases in # of people employed and unemployed, these are net figures. ² Example: September to December 2008 (U S Example : September to December 2008 (U.S.) ± Jobs created = 6,712,000 ± Jobs eliminated = 8,467,000 ± Net jobs created = The Annual Unemployment Rate in the United States, 1950–2008 The unemployment rate rises during recessions and falls during expansion. Shaded areas indicate recessions.
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8/25/2010 7 Types of Unemployment 1) Frictional Unemployment (Job Search) ± Short-term unemployment that arises from the process of matching workers with jobs.
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Chapter 8 Econ 2-3 - 8/25/2010 Chapter 8 Unemployment and...

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