U 6 underemployment rate Unemployed marginally attached part time want full

U 6 underemployment rate unemployed marginally

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U-6 underemployment rate (Unemployed + marginally attached + part-time want full) / Labor force Divided by labor force
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This is typically higher than the unemployment rate calculated with U-3 Picking up a lot of marginally workers Question: In your view, which of the following shows the most pain in the labor market during and after the Great Recession? Employment (“payrolls” in our charts) Unemployment rate U-6 March 23 Question: In your view, which of the following shows the most pain in the labor market during and after the great recession? A. Employment (“payrolls” in our charts) - U3 B. Unemployment C. U6 unemployment rates - broadest term of unemployment D.% of Unemployed who are unemployed > 27 weeks E.Labor force participation rate Question: For workers, how does this economy compare to “Normal times?” Answer: 4.7% unempo. Rate is near natural rate :) Lower participation rate (more retiring is fine, but ⅛ people in prime working times are out of jobs) :( Those who are unemployed it is usually for a long time, better then it was but not good :( Many part-time want full-time jobs :( Real wages have been growing slowly ( :( because not that big of an increase or change) Part B- Connection between real GDP and unemployment Question: To reduce the unemployment rate and increase employment, what needs to happen to real GDP? It is just more production → more hiring → less unemployment? Nope. Never that simple. Potential GDP Is real GDP when all firms are operating at “capacity” Factories and offices running normally - not half-staffed nor extra overtime “Capacity ≄ maximum possible” Capacity can be exceeded for a year or two with extra overtime Question: Potential GDP ___ from year to year & in a recession it is ___ than real GDP. Is constant, more than Is constant, less than Grow, less than Grows, more than Output gap= real GDP - potential GDP As of 2016 IV: $156 billion … 0.9% of real GDP 6.7% gap in 2009 III
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When real GDP= potential GDP, also at full employment and the natural rate of employment Question: Are there times of growth with rising unemployment? A. No B. Not sure C. Yes Leads to “Okun’s Law” Okun’s Law The connection between real GDP (y) and the unemployment rate (u) Idea: (i) The labor force grows as the population grows (ii) Productivity (Y/L) experiences increases over the years So some economic growth (which creates jobs) is needed to keep the unemployment rate constant over the years Formula: △%Y= 3-(2 △%u) (via stat. studies) Question: What rate of economic growth keeps the unemployment rate constant? 3.0% Unemployment rate constant is a 0% change in u so then you wipe out the second part of the problem, so that just leaves the 3% Question: Say that economic growth for one year was 1% and it accelerated to 5% for the next year.
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