UnemploymentUnemploymentUnemploymentElias YannopoulosSeptember 10, 2012Elias Yannopoulos UnemploymentUnemploymentThree Types of UnemploymentStructural - unemployment caused by the institutionalstructure of an economy or by economic restructuring makingsome skills obsolete”Creative Destruction”New jobs are created from growing industriesJobs are ”destroyed” from industries that are being madeobsoleteFrictional - unemployment caused by people entering the jobmarket and people quitting a job just long enough to look forand find another joblimited information makes finding a job take timeAffected by information availability as well as hiring and firingregulationsCyclical - unemployment resulting from fluctuations ineconomic activityElias Yannopoulos UnemploymentUnemploymentUnemployment ConceptsUnemployment rate - the percentage of people in theeconomy who are willing and able to work but are not workingLabor force - those people in an economy who are willing andready to workNatural rate of unemployment - No cyclical unemploymentexistsFull employment output - The output level whenunemployment is equal to the natural rateTarget rate of unemployment - the lowest sustainable rateof unemployment that policy makers believe is achievablegiven existing demographics and the economy’s institutionalstructureElias Yannopoulos UnemploymentUnemploymentMeasuring UnemploymentNumber of Unemployed - UNumber of Employed - ELabor Force - LPopulation - PLabor Force Participation Rate =LPUnemployment rate (u) =ULEmployment rate (e) =EL= 1 − uL = E + UElias Yannopoulos
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