ECON 2203 1st Edition Lecture 12KeyEquationsExamplesDefinitionsImportant InformationOutline• Types of unemployment • Natural rate of unemployment • Three macroeconomic goals Types of Unemployment(Left to Right)Frictional Unemployment Structural UnemploymentSeasonal Unemployment Cyclical UnemploymentThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Frictional Unemployment o Unemployment caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labor force, reentering the labor force. Seasonal Unemployment o Joblessness related to changes in weather, tourist patterns, or other seasonal factors. – Sometimes, it is included in Frictional Unemployment Both of these two types of unemployment are benign. They are inevitable and predictable. Structural Unemploymento Unemployment caused by a mismatch of the skills of workers out of work and the skills required for existing job opportunities. o Unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one. Unemployment due to microeconomic causes– Frictional, seasonal, and structural unemployment– They are attributable to changes in specific industries and specific labor markets, rather than to the overall level of production in the country.These three types of unemployment are inevitableCyclical Unemploymento Unemployment caused by the lack of jobs during a recession. o Due to Macroeconomic causeo Macroeconomists try to minimum cyclical unemployment o It is a problem for macroeconomic policy. That’s why macroeconomists focus almost exclusively on cyclical unemployment, rather than other types of joblessness.o It is a problem because we cannot predict it, and we do not know when jobs come back. Question 3: Types of UnemploymentCyclical, Frictional, or Structural Unemployment?Structuralo Automobile demand has fallen during a recent recession, and Caroline has been laid off from her job on the assembly line Cyclical Unemploymento Ella just graduated from college and is looking for a full-time position with an investment banking firm Frictional Unemploymento John recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work Structural UnemploymentNatural Rate of Unemployment Unemployment rate = Frictional + Seasonal + Structural + Cyclical* Unemployment rate CANNOT be Zero! Nature rate of unemployment – the normal rate of unemployment around which the unemployment rate fluctuates. – Nature rate of unemployment = Frictional + Seasonal + Structural unemployment – Any unemployment beyond this is considered cyclical unemployment.– In U.S, natural rate of unemployment is5.5%Natural Rate of Unemployment Unemployment rate = Frictional + Seasonal + Structural + Cyclical*Natural rate of unemployment; Cannot be Zero!!- Economic goal for unemployment: – Zero Cyclical unemployment– Natural rate of unemployment– Full employment- When there is no cyclical unemployment, the economy is considered to be full employed.– Low unemploymentNatural Rate of UnemploymentUnemployment rate = Natural rate of unemployment + Cyclical(= Frictional + Seasonal + Structural + Cyclical)Question 3:The sum of the frictional, seasonal, and structural unemployment rates is equal to thea. Potential unemployment rate b. Actual unemployment rate c. Cyclical unemployment rate d. Fullemploymentrate e. Natural rate of unemployment Question 4:True or False:This economy is not currently at its natural rate of unemploymentFALSEThree Macroeconomic Goals1. Growth(Chapter5,7) 2. Stability(Chapter6) 3. Full Employment(Chapter10)- Long-term goalsSummary for Chapter 10How to measure unemployment?– Labor force, unemployed, employed, unemployment rate, and labor force participation rateLimitations of unemployment – Discouraged workers– Involuntary part-time workersTypes of unemployment – Frictional Unemployment – Structural Unemployment – Seasonal Unemployment – Cyclical UnemploymentNatural rate of Unemployment – Full employment– Zero cyclical unemploymentThree Macroeconomic GoalsPrinciples of MacroeconomicsLecture Notes> VERY DETAILED> COLOR CODED> Easy to read> May include information that was stated directly from the teacher in class<p>Principles of Macroeconomics</p><p>Introduction to Macroeconomics</p><p>Hui