Types of Unemployment

Frictional UnemploymentStructural UnemploymentCyclical Unemployment

Quick Practice

Lets add Seasonal Unemployment

Natural Rate of Unemployment

Frictional U + Structural U = NRU = 5% U = FE

Cyclical U is Macroeconomic Unemployment

Who are the Unemployed?

It’s a long story…Start with the total population of the US:

Subtract those under 16Subtract those in the Armed Forces and

"institutionalized"

This gives you the “Non Institutional Adult Civilian Population”

Who are the Unemployed cont.

From Non-Institutional Adults…Subtract those already retired and the

“homemakers”Subtract full time students over the age of 16Subtract the "discouraged" (those not looking)

This leaves the “Civilian Labor Force”

Who are the Unemployed cont.

From the Civilian Labor Force…Subtract Full time employeesSubtract Part time workers (15-39 hr/wk)Subtract unpaid family business workers

(family)Subtract anyone on sick leave, strike, or

vacation

This leaves you with the “Employed Population”

Who are the Unemployed? cont.

Everyone else…

They must be either looking for a job and not finding one, or in between jobs/changing careers

NOTE: People who would like work but have given up looking for a job ar “Discouraged workers” and DO NOT count toward the official unemployment rate.

Other things to know…

Labor-Force Participation RateLabor productivity vs. Efficient use of

laborHuman capital

The knowledge, skills, training, etc… that make a person productive. any other measure of quantity of labor.

It is not the civilian labor force or any measure of the Quantity of Labor