ECON 2105 1nd Edition Lecture 6 Outline of Last Lecture (module 10 & 11)I. Income Approach II. Calculating GDP III. Economic Concepts IV. Module 11- Interpreting Real Gross Domestic Product Outline of Current Lecture (Module 12) I. Measuring Unemployment II. Labor Force III. Define Labor OutcomesIV. Significance of Unemployment V. Growth and Unemployment Current LectureThe Meaning and Calculation of Unemployment Module 12 I. Measuring Unemployment - Every month the Census Bureau contacts 60000 households to determine their economic activity - It asks a series of questions that the Bureau of Labor Statistics (BLS) uses to determine unemployment - Focus on adult population (16 or older), who are in the labor force, and if they are employed (contributing to GDP) or unemployed II. Labor ForceThese 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.- Employed- working full-time or part-time (job holders) also those who work for family and don’t necessarily get paid are still considered employed - Unemployed- (job seeking) actively searching for a job in the last 4 weeksNot in Labor force- Retired people - Marginally attached workers- women with children, people going back to college - discouraged workers - Disabled - Institutionalized people - Non-civiliansExamples - David, a 13-year-old child, who cuts grass in the neighborhood for a flat rate of $50.  Not counted as employed (below 16, not in the labor force) - Shelby, a stay-at-home mom, who was a financial analyst at Wells Fargo ayear ago.  Not in the labor force - Henry, a full-time college student, who is looking for a part time job in Athens.  Full-time students are counted as not in the labor force - Sasha, who works part time at the Russian Restaurant but would prefer more hours  Employed (considered under-employed) Problems with Unemployment Statistics - Discouraged workers: nonworking people who have given up looking for work for the time being. Not considered unemployed. (the deeper the recession the more discouraged workers there are) - Marginally attached workers: those who were available and actively looked for work recently but are not currently looking (in the past 12 months but NOT in the past 4 weeks)- Underemployed workers: people who work part time because they cannot find full-time jobs.III. Define Labor Outcomes - Unemployment rate: the percent of the total number of people in the labor force who are unemployed - Labor force: all workers, employed and unemployed- Labor force participation rate: the percentage of adults (16 years old and higher) in the labor force - Measuring the labor force participation rate: LFPR:100populationAdult forceLabor 100populationAdult EmployedUnemployed- Measuring unemployment Unemployment rate (%) =UnemployedUnemployed + Employed´100 =UnemployedLabor force´100IV. Significance of Unemployment Rate - The unemployment rate is a good indicator of how easy or difficult it is to find a job given the current state of the economy.- It can overstate the true level of unemployment.o Even if the labor market is healthy, it takes time to find the right job. (job search, finding the best job) - It can understate the true level of unemployment.o You are not “unemployed” if you have given up looking for a job because there are no jobs available.Labor Market Flow in an Average Month in 2007V. Growth and Unemployment - A jobless recovery is period in which the real GDPP growth rate is positive but the unemployment rate is still rising. Growth and Changes in Unemployment- Generally there is a strong negative relationship between growth in the economy and the rate of