Unemployment Part 2

1. UNEMPLOYMENT
Part 2

2. Review:
UNEMPLOYMENT:
The state of wanting a job, but
being without a job.
UNEMPLOYMENT RATE:
Unemployed People
Unemployment Rate =
Total Labor Force

3. 1) Employed and in the Labor Force
2) Unemployed and in the Labor Force
3) Not in the Labor Force

4. WHAT’S A HIGH
UNEMPLOYMENT RATE?
4% is considered to be a “good” level of
unemployment. Thus, anything above this
could have negative impacts on a country.
The target unemployment rate varies from
country to country. Let’s look at why a rate
of zero is an unattainable goal.

5. CYCLICAL UNEMPLOYMENT
Unemployment tied to the business
cycle. The economy goes through
periods of growth and recession: during
recession times, unemployment rises.

6. CYCLICAL UNEMPLOYMENT
“The business cycle” - the upwards and
downwards fluctuations that an
economy experiences over time.

7. FRICTIONAL UNEMPLOYMENT
Unemployment that occurs naturally as
people move between jobs. At any
given time, 1-2 percent of unemployed
people are in the process of
transitioning from one job to another.

8. STRUCTURAL UNEMPLOYMENT
Unemployment that occurs when there is a
serious mismatch between what companies need
and what workers can offer. Workers may lack
the required job skills, or they may live far from
regions where jobs are available but are unable to
move there. Or they may
simply be unwilling to
work because existing
wage levels are too low.
Structural Frictional

10. “FULL” EMPLOYMENT
Full employment is the 2nd macroeconomic
goal. This is not a rate of 0% - it is a
situation in which all available labor
resources are being used in the most
economically efficient way. Full employment
embodies the highest amount of skilled and
unskilled labor that could be employed
within an economy at any given time. The
remaining unemployment is frictional.

11. Remember that the unemployment rate is
an average of a whole country, and that
certain groups of people may experience
higher levels of unemployment than others.
For example, people with
only a high school degree
face greater unemployment
than people with a college
degree. Minority culture
groups (see left) might
experience higher
unemployment than the
national averages well.
USA