ECON 203 1nd Edition Lecture 23Outline of Last Lecture I. Classification of Citizensa. Employedb. Unemployedc. Not in labor forceII. Labor populationIII. Labor forceIV. Unemployment rateOutline of Current LectureI. Unemploymenta. Three classificationsb. Labor forcec. Labor force participation rated. Analysis of changing unemployment rateCurrent LectureI. Unemployment (cont.)a. There are three classifications i. Employed- trade time for pay/profitii. Unemployed- do not have work and are actively searching for itiii. Not in the labor force (NILF)- do not have work and are not actively searching for itb. Labor force=unemployed + employedc. Labor force participation rate (LFPR)= labor force/ labor population= (unemployed+ employed)/(employed+unemployed+NILF)i. Ex. 100people are 16 years or older in August60 full time10 part time5 have no job, but are looking25 have no job and are not lookingThis gives us 70 employed, 5 unemployed, and 25 NILFLabor population= 70+5+25=100Labor force= 70+5=75Unemployment rate= unemployed/ labor force= 5/75=6.667%These 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.LFPR= 75/100=75%ii. Ex. Say those same 100 people are now in Sept. 60 full time10 part time10 no job, but looking20 no job, not lookingThis now gives 70 employed, 10 unemployed, and 20NILFLabor population is still 100Labor force= 70+10=80Unemployment rate= 10/80=12.5%The increase in people actively searching for a job increases both the unemployment rate and the LFPR, even though nothing really changed in terms of employed people. d. Analysis of changing unemployment ratei. If unemployment INCREASESLFPR increases- good sign, means more people from NILF start looking forJobsLFPR remains constant- bad sign, means people go from employed to UnemployedLFPR decreases- VERY bad sign, means unemployed people have given up the job search(i.e. more discouraged workers)ii. If unemployment DECREASESLFPR increases- VERY good sign, means more people become employed and more NILF begin looking for jobsLFPR stays the same- good sign, means more unemployed people find JobsLFPR decreases- bad sign, means more discouraged workers stop looking for
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