Chapter 5 - Chapter 5: Monitoring Jobs and Inflation 1....

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Chapter 5: Monitoring Jobs and Inflation 1. Employment & Unemployment a. Why Unemployment Is a Problem a.i. Lost Production and Incomes a.i.1. loss of jobs brings loss of income for unemployed and loss of production a.i.2. unemployment benefits create safety net a.ii. Loss of Human Capital a.ii.1. unemployment permanently damages person’s job prospects a.ii.2. cost of unemployment spreads unequally b. Current Population Survey b.i. US Census Bureau surveys 60,000 households b.ii. questions about age and job market status of members of household b.iii. population divided into 2 groups: working age population and others who are too young or are institutionalized b.iii.1. working-age population- ttl # of ppl aged 16+ who are not in jail, hospital, or institutional care b.iii.1.a. divided into 2 groups: labor force & not in the labor force b.iii.1.b. labor force-sum of employed and unemployed b.iii.2. to be unemployed must have one of following: b.iii.2.a. w/o work but has made efforts to find a job within previous 4 weeks b.iii.2.b. waiting to be called back b.iii.2.c. waiting to start new job c. Three Labor Market Indicators c.i. unemployment rate-% of people in labor force who are unemployed c.ii. Number of People d. = unemployed X 100 d.i. Labor Force d.i.1. fluctuates over business cycle d.i.2. reaches peak value after recession ends d.ii. employment-to-population rate- % of ppl working age who have jobs 1
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d.ii.1. indicator of availability of jobs and degree of match btw d.ii.2. Number of People = Employed_____ X 100 Working-Age- Population d.iii. Labor Force Participation Rate- % of working age pop who are members of labor force d.iii.1. indicator of willingness of ppl of working age to take jobs d.iii.2. = Labor Force X 100 Working-age- pop d.iv. fluctuations result from unsuccessful job seekers who are available and willing to work but have not made specific efforts to find a job within previous 4 weeks 2. Unemployment and Full Employment a. purpose of unemployment rate is to measure underutilization of labor resources but its also an imperfect measure for 2 reasons b. Underutilized Labor Excluded b.i. Marginally attached workers- ppl who currently are neither
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Chapter 5 - Chapter 5: Monitoring Jobs and Inflation 1....

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