Unemployment: Percentage of people who dont have jobs but are in the labor force.
Labor Force: Number if people in a country that are classified as either employed or unemployed.
Unemployment rate:
# of unemployed
*divided by
# of emplpoyed + # of unemployed
*Multiplied by 100
Not in Labor Force:
-Kids
-Retired People
- Full time student
- Military Personnel
- mentally insane
- Stay at home parent
- Discouraged Worker
- Incarcerated
Full employment - Occurs when there is no cyclical unemployment present in the economy.
Also known as Natural rate of unemployment. (NRU)
4-5% is out desired goal.
Why is Unemployment good?
-Because there is less pressure to raise wages and more workers are available for future expansions.
Why Is Unemployment bad?
-Not enough consumption (GDP)
- Too much poverty
- Too much Gov't assistant needed
Okun's Law: For every one percent of unemployment above the NRU causes a two percent decline in real GDP.
Frictional Unemployment: People between a job becasue of new opportunities, lifestyle, choices, and educational level.
Seasonal Unemployment: Waiting for the right season to conduct your trade.
Cyclical Unemployment: Downturn in the business cycle. Bad for Society and individual.
Structural Unemployment: Lack of skill, decline in an industry, and technology changes.
