Unemployment

• Unemployment - Percentage of people who do not have a job but are part of the labor force 
• Labor force - The number of people that are classified as either employed or unemployed  
• Unemployment rate
• = (The number of unemployed / number of employed + number of unemployed) x 100 
• Not in the labor force
• Kids 
• Retired people 
• Military personnel  
• Mentally insane 
• Incarcerated  
• Full time student  
• Stay at home parent 
• Discouraged workers   
• Types of unemployment  
• Frictional - Between jobs because you choose new opportunities new choices new lifestyles and educational levels  
• Voluntary 
• Ex. Quit job to go back to school, Leave job at burger king become teacher aid  
• Structural - Associated with lack of skills or a decline in industry or change in technology 
• Ex. Can not read or right   
• Seasonal - People are waiting for the right season to conduct their trade  
• Ex. Mall Santa, School bus driver, and Lifeguards  
• Cyclical - Associated with downturns in business cycle 
• Bad for society  

·       Full employment

o   Occurs when there is no cyclical unemployment present in the economy  

• Natural rate of unemployment  (NRU) 
• Achieved when labor market are in balance  
• Structural unemployment + fictional unemployment  
• Why is unemployment good? 
• Less pressure to raise wages  
• More workers available for future expanses  
• Why is unemployment bad? 
• There is not enough consumption  (GDP) 
• To much poverty  
• To much government assistance is needed 
• Okun’s law 
• For every 1 % of unemployment above the NRU causes a 2 % decline in real GDP