Chapter 9 Unemployment and Its Natural Rate

Chapter 9 Unemployment and Its Natural Rate - Chapter IX...

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Chapter IX Unemployment and Its Natural Rate In this chapter, look for the answers to these questions: How is unemployment measured? What is the “natural rate of unemployment”? Why are there always some people unemployed? How is unemployment affected by unions and minimum wage laws? What is the theory of efficiency wages, and how does it help explain unemployment? Identifying Unemployment Produced by Statistics Canada. Based on regular survey of 50,000 households = Labour Force Survey *Note-50000 inexact number Based on “adult population” (15 years or older) Labour Force Statistics Statistics Canada divides population into 3 groups: Employed : A person is considered employed if he or she has spent most of the previous week working at a paid job. Unemployed : A person is unemployed if he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job. Not in the labour force : everyone else –students, retirees, homeworkers… The labour force is the total # of workers, including the employed and unemployed. Unemployment rate (“u-rate”): % of the labour force that is unemployed labour force participation rate : % of the adult population that is in the labour force the breakdown of the population in 2009 employed(16.85 million) unemployed(1.52 million) not in labour force(8.94 million), labour force: adult population(27.31 million) The labour Force Survey deliberately excludes individuals in all of the following categories: 1. persons younger than 15 years old, 2. persons residing in the Yukon, the northwest territories, Nunavut, and aboriginal settlements, 3. Full-time members of the armed forces, inmates in institutions.
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Unemployment rate is not evenly distributed across Canada. Does the Unemployment Rate Measure What We Want It To? It is difficult to distinguish between a person who is unemployed and a person who is not in the labour force. Discouraged searchers , people who would like to work but have given up looking for jobs after an unsuccessful search, don’t show up in unemployment statistics. Other people may claim to be unemployed in order to receive financial assistance, even though they aren’t looking for work. How Long Are the Unemployed without Work? Most spells of unemployment are short. In 2009, the average spell of unemployment lasted 15.6 weeks.
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This note was uploaded on 01/18/2012 for the course ECON 102 taught by Professor ? during the Fall '08 term at Waterloo.

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Chapter 9 Unemployment and Its Natural Rate - Chapter IX...

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