Tuesday, February 9, 2016

Unemployment

Unemployment

  • Failure to use available resources, esp. labor, to produce desired goods and services.
  • Labor Force - 16+, willing to work, employed, unemployed
    • Excluded: 
      • Military
      • Homemakers
      • Retired
      • Disabled
      • Asylum People'
      • Incarcerated
      • Students
      • Those not looking for work
  • Unemployment Rate - 4-5% = Full or natural unemployment; NRU
  • Calculated by:
    • [# of unemployed/labor force] x 100

Types of Unemployment

  1. Frictional
    • People job searching; temp. unemployed or between jobs; have transferable skills
      • Ex: HS/College grad.; Job prospectors
  2. Structural
    • Changes in structure of labor force obviates skills; no transferable skills.
  3. Seasonal
    • Due to season and nature of job
      • Ex: Bus drivers, Santa; Easter Bunny; Lifeguards; Construction
  4. Cyclical
    • Results from economic downturns i.e. recessions; as demand for goods and services fall, demand for labor fall and workers are laid off
  • NRU = Frictional + Structural
    • No Cyclical 

GDP Gap

  • Amount by which actual GDP falls short of potential

Okun's Law

  • For every 1% that actual unemployment exceeds NRU, GDP gap of 2% occurs

Rule of 70

  • Determines amount of years to take for value to double given a particular annual growth rate.


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1 comment:

  1. Dillon B.February 10, 2016 at 12:37 PM

    Although the rule of 70 seems like a complicated calculation, it is actually quite simple. All you have to do for the rule of 70 is devide 70 by the rate and you will find the amount of years.

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