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Unemployment

Unemployment

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Unemployment

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  1. Unemployment • Population Survey • Every month, the U.S. Census Bureau surveys 60,000 households and asks a series of questions about the age and job market status of its members. • Called the Current Population Survey

  2. Unemployment • Population Survey • The working age population is the total number of people aged 16 years an over who are not in a jail, hospital, or some other form of institutional care.

  3. Unemployment • Population Survey • The working age population is divided into those in the labor force and those not in the labor force. • The labor force is divided into the employed and the unemployed.

  4. Unemployment • To be counted asunemployed, a person must be available for workand must be in one of three categories: 1) Without work but has made specific efforts to find a job within the previous four weeks

  5. Unemployment • To be counted as unemployed, a person must be available for work and must be in one of three categories: 2) Waiting to be called back to a job from which he or she has been laid off

  6. Unemployment • To be counted as unemployed, a person must be available for work and must be in one of three categories: 3) Waiting to start a new job within 30 days

  7. Population Labor Force Categories 0 90 180 270 Population (millions)

  8. Population Labor Force Categories Population 0 90 180 270 Population (millions)

  9. Population Labor Force Categories Population Young and institution- alized Working-age population 0 90 180 270 Population (millions)

  10. Population Labor Force Categories Population Young and institution- alized Working-age population Not in labor force Labor force 0 90 180 270 Population (millions)

  11. Population Labor Force Categories Population Young and institution- alized Working-age population Not in labor force Labor force Employment Unemployment 0 90 180 270 Population (millions)

  12. Unemployment • Three Labor Market Indicators • The unemployment rate • The labor force participation rate • The employment-to-population ratio

  13. Number of people unemployed Labor force Unemployment rate = ´ 100 Unemployment Rate • The unemployment rate is the percentage of the people in the labor force who are unemployed.

  14. Unemployment Rate • The unemployment rate is the percentage of the people in the labor force who are unemployed. Labor force = Number of people employed + Number of people unemployed

  15. Labor force Working age population Labor force participation rate = ´ 100 Unemployment Rate • The labor force participation rate is the percentage of the working-age population who are members of the labor force.

  16. Unemployment Rate • Discouraged Workers • People who are available and willing to work but have made not made specific efforts to find a job within the previous four weeks.

  17. Employment, Unemployment, and the Labor Force: 1960–1996

  18. The Changing Face of the Labor Market

  19. Unemployment andFull Employment • People become unemployed if they: 1) Lose their jobs and search for another job. 2) Leave their jobs and search for another job. 3) Enter or reenter the labor force to search for a job.

  20. Unemployment andFull Employment • Entrants are people who are entering the labor force. • Reentrants are people who have previously withdrawn from the labor force. • Reentrants/entrants are a large component of the unemployed • Numbers fluctuate mildly

  21. Unemployment by Reasons

  22. Unemployment by Duration Less than 5 weeks 5-14 weeks Business cycle peak 15-26 weeks Business cycle trough 27 weeks and over 0 10 20 30 40 50 Percentage of unemployment

  23. Unemployment by Demographic Group Black males 16-19 Black females 16-19 White males 16-19 White females 16-19 Business cycle peak Black males 20 and over Black females 20 and over Business cycle trough White males 20 and over White females 20 and over 0 10 20 30 40 Unemployment rate

  24. Unemployment andFull Employment • There are three types of unemployment: 1) Frictional 2) Structural 3) Cyclical

  25. Unemployment andFull Employment • Frictional Unemployment • Arises from normal labor turnover — people entering and leaving the labor force and the creation and destruction of jobs • Influenced by unemployment benefits

  26. Unemployment andFull Employment • Structural Unemployment • Arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs • Typically lasts longer than frictional

  27. Unemployment andFull Employment • Cyclical Unemployment • Arises from the fluctuations of the business cycle • Increases during a recession and decreases during and expansion • The natural rate of unemployment excludes cyclical unemployment

  28. Unemployment andFull Employment • Full employment exists when the unemployment rate equals the natural rate of unemployment. • It fluctuates periodically • Economists disagree about the size of the natural rate and the extent to which it fluctuates