Unformatted text preview: ary 5, 2014 31 / 40 Unemployment Unemployment Rates (Figure 5.15) Figure : National Unemployment Rates Ryan W. Herzog (GU) Labor Market February 5, 2014 32 / 40 Unemployment Local Unemployment Rates (Figure 5.16) Figure : Local Unemployment Rates Ryan W. Herzog (GU) Labor Market February 5, 2014 33 / 40 Unemployment Labor Force (Figure 5.17) Figure : Labor Force Participation Rates Ryan W. Herzog (GU) Labor Market February 5, 2014 34 / 40 Unemployment Unemployment Duration (Figure 5.18) Figure : Local Unemployment Rates Ryan W. Herzog (GU) Labor Market February 5, 2014 35 / 40 Types Types of Unemployment
There are three main types of unemployment:
1 2 3 Frictional - is short-term unemployment associated with the process of
matching workers with jobs.
Structural - is long-term chronic unemployment that exists even when
the economy is producing at a normal rate. Several factors contribute
to structural unemployment, including lack of skills, language barriers,
Cyclical - is the extra unemployment that occurs during periods of
recessions. Since frictional and cyclical unemployment is short lived it is fairly low
cost. In the long run, frictional unemployment will improve
productivity as workers are more appropriately matched into jobs.
Structural unemployment can be very cost (reeducating workers and
unemployment compensation). There is also a large psychological
Ryan W. Herzog (GU) Labor Market February 5, 2014 36 / 40 Views Two Views of the Labor Market One of the goals of macroeconomics is to be able to explain the
relationship between output, unemployment, and inﬂation.
The relationship between output and labor is tricky to deﬁne.
As ﬁrms implement new technologies they will hire more workers and
increase output. This suggest that changes in labor demand cause
output to increase.
Conversely an increase in demand for goods and services will increase
output prices causing labor demand to increase, which suggest output
changes labor demand.
The more concerning question...
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