Unit 5 full employment
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Unit 5: Full Employment. In the long run, the right answer to unemployment is to create more jobs. - George Walker Bush, Unemployment is of vital importance, particularly to the unemployed. - Edward Heath Business will be either better or worse.

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Unit 5: Full Employment

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Unit 5 full employment

Unit 5: Full Employment

  • In the long run, the right answer to unemployment is to create more jobs.

  • - George Walker Bush,

  • Unemployment is of vital importance, particularly to the unemployed.

  • - Edward Heath

  • Business will be either better or worse.

  • When more and more people are thrown out of jobs, unemployment tends to rise.

  • - Calvin Coolidge


Society s goals for macro system

Society's Goals for Macro System

  • Growth

  • Stable Prices & Money

  • Full Employment

  • Stability of Business Cycle


Key measures

Key Measures:

  • Unemployment Rate

  • Labor Force Participation Rate

  • Employment-Population Rate

  • Net New Jobs Create

  • New Unemployment Claims

  • Jobs-workers ratio


Unemployment in the u s

Unemployment in the U.S.

US Unemployment Data - BLS.gov


Analyzing employment

Population

Institutional Pop.Children (<16)Active Duty Military

RetiredDon't want employment nowIn SchoolDiscouraged - quit looking for work

Not In Labor Force

AdultNon-InstitutionalCivilianPop. [A]

Employed [C]

Unemployed [D](Not Employed, But Actively Looking)

Labor Force [B](willing & able to work)

Voluntary Quit

Involuntary Quit

Returning

New Entrant

Analyzing employment


Defining adult civilian non institutionalized population

Defining “Adult Civilian Non-Institutionalized Population”

  • = labor force + not-in-labor-force

  • = total population – institutionalized – active duty military – children under age 16


Defining employed person is working regardless of type or num of hours jobs

Defining “Employed”: person is working regardless of type or num of hours/jobs.


Defining unemployed no job but willing able and actively looking for work

Defining “Unemployed”: no job, but willing, able, and actively looking for work.


Defining labor force

Defining Labor force:

  • unemployed + employed


Defining not in labor force

Defining “Not-in-labor force:

  • retired, stay-at-home spouses, idle rich, non-working students, discouraged would-be workers (not looking)


Unemployment rate unemployed labor force

Unemployment Rate:= Unemployed / Labor Force

  • Excludes discouraged workers


Labor force participation rate

Labor Force Participation Rate:

  • = Labor Force / Civ.N-I Adult Pop.

  • = (employed + unemployed) / CivN-IA Pop


Employment population ratio

Employment Population Ratio

  • = employed / population


Why don t the unemployed have a job right now 4 types of unemployment

Why don’t the unemployed have a job right now? 4 Types of Unemployment:


Frictional open job exists for each unemployed worker but they haven t matched up yet

Frictional: open job exists for each unemployed worker but they haven’t matched up yet


Structural open jobs exist but require skills locations that match workers

Structural: open jobs exist but require skills/locations that match workers’


Seasonal temporary situation because job only exists during certain months of year

Seasonal: temporary situation because job only exists during certain months of year.


Cyclical more unemployed workers than available open jobs

Cyclical: more unemployed workers than available open jobs.


Policy goal full employment but that doesn t mean 0 rate

Policy Goal: ‘full employment’, but that doesn’t mean 0% rate.


Natural rate of unemployment economy at capacity with zero frictional unemployment

NATURAL RATE OF UNEMPLOYMENT: economy at capacity with zero frictional unemployment.


Full employment is usually defined as achieving the natural rate or zero cyclical

Full Employment is usually defined as achieving the “natural rate” or zero cyclical.


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