What is unemployment by zaz58402

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									What is unemployment?

Official unemployment rates are based on
 a survey by the bureau of labor Statistics
 of 50,000 households
survey places people in one of 3
 categories
  employed
  unemployed
  not in labor force
Who is employed ?

 Any work for profit during survey week:
   full time
   temporary
   part time
 Anyone with a job but not working during survey week
  because of:
   vacation
   illness
   maternity or paternity leave
   involved in an industrial dispute
Who is Unemployed?

Don’t have a job during survey week
Actively looking for work
Currently available for work
Who is not in the Labor
Force?

people without a job and not looking for
 one
  retired
  disable
  under 16
  frustrated
Measuring unemployment

problems with the current measurement
  Are they actually looking for work?
  How available are they? Won’t accept jobs
   beneath them.
  Frustrated job searchers
  don’t respond to survey
Unemployment today

The bureau’s weekly survey isn’t perfect
 and may actually underestimate the
 numbers, but it is consistent and can
 provide helpful information.
bureau of labor statistics
Unemployment to the
economist

failure of the markets to clear
  someone who is willing to work at the going
   wage cannot find work. HOW?
     Wages are above market clearing
        • price floors - the quantity supplied of labor is greater
          than the quantity demanded
Why don’t wages seek
equilibrium?

Lower wages can lead to less demand for
 jobs, less production and a recession
minimum wage laws
unions
Why is Unemployment
bad? Or is it?

Harms individual who is unemployed
Reduces the size of the economic pie
 ( unemployed workers not contributing)
raises the need for government spending
 on welfare and social programs.
  A 1% reduction in unemployment would add
   $80 billion dollars to the US economy
History of unemployment in the U.S. A better
way to understand causes, solutions and
effects


  relatively low from 1950’s to 1970’s
  raise in 1970’s to a peak in 1982
  back to early ranges of 4% - 5%
    Historical unemployment from the Bureau of
     labor statistics
History of unemployment
in Western Europe

1970’s & 1980’s rise in unemployment like
 the U.S. but never came back down.
Why does unemployment in Western
 Europe remain high today?
To better understand we need to look at
 the different types of Unemployment
  Frictional unemployment
  Structural Unemployment
  Cyclical Unemployment
Frictional Unemployment

unemployment that results form
 fluctuations of individual firms a market
 economy
  firms succeed and fail in the market system
     1%-2% unemployment
     cannot be eliminated
     government can shorten duration with job search
      and relocation efforts
Structural Unemployment

laws and regulations which discourage
 workers form working or employers from
 employing
  rules prohibiting layoffs
  taxes on employment
  generous welfare & unemployment benefits
  Solution- balance social programs &
   employment
Cyclical Unemployment

 unemployment resulting from many
 businesses having a decrease in demand
 or a recessions or depressions in the
 economy.
  Low demand = low employment
  solution - government create demand
   through spending and tax relief
Unemployment in Western
Europe

Western Europe has generous welfare &
 unemployment programs
  many economists feel these programs have
   created a generation of structurally
   unemployed.
    No work but money & health care
Jobs or good jobs at good
wages?

Western Europe Vs. the U.S
  western Europe = high unemployment
    good jobs
    high wages
    generous welfare and unemployment benefits
  U.S. = low unemployment
    lower wages & more incentive to work.
Wages and Unemployment

in a market economy wages are based on
 productivity.
  If the wage in below worker productivity
    finds a new job
    employer increases pay to keep
  If wages are above worker productivity
    firm goes bankrupt
    fired or laid off
    salary cut

								
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