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Unemployment

Unemployment. Part VIII Unit 2 Chapter 8. Full Employment Unemployment Rate. Full employment does not mean zero unemployment Full employment unemployment rate is = to the total frictional and structural unemployment Called the natural rate of unemployment

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Unemployment

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  1. Unemployment Part VIII Unit 2 Chapter 8

  2. Full Employment Unemployment Rate • Full employment does not mean zero unemployment • Full employment unemployment rate is = to the total frictional and structural unemployment • Called the natural rate of unemployment --achieved when the number of job seekers = the number of job vacancies

  3. Measuring Unemployment • Population is divided into 3 groups: • 1. those under 16 or institutionalized • 2. those “not in the labor force” • Homemakers, “discouraged workers,” and full time students over the age of 16

  4. 3. civilian labor force • Employed Full or Part Time—counted the week of the 12th of the month • Employed unpaid workers in a family business, if working over 15 hours • Those on sick leave, on strike or on vacation during the week of the of the 12th • Unemployed because they are actively looking for work but can’t find it

  5. Unemployment Rate • Measured by a random survey of 60,000 households nationwide • Part-time workers are counted as employed • Discouraged workers are not counted • (some believe these understate the unemployment rate) • Unemployment rate = Unemployed/labor force X 100

  6. The GDP Gap and Okun’s Law • GDP gap is the difference between potential and actual GDP • Okun quantified the relationship between unemployment and GDP as follows: • For every 1% of unemployment above the natural rate, a 2% GDP gap occurs • This is Okun’s law

  7. Unequal Burdens of Unemployment • Rates are lower for white-collar workers • Teenagers have the highest rates • African Americans have higher rates then whites • On average, less educated workers have a higher unemployment rate • Long term unemployment rate (15 weeks or more) is much lower than the overall rate • male and female rates are comparable

  8. Study Questions Pages135 and157 • Page 135 # 12 and 13 • Page 157 # 1, 4, 5, 6 and 8 • Be sure to answer all parts of the question.

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