Unit 5: Full Employment
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Unit 5: Full Employment In the long run, the right answer to unemployment is to create more jobs. - George Walker Bush, Unemployment is of vital importance, particularly to the unemployed. - Edward Heath Business will be either better or worse. When more and more people are thrown out of jobs, unemployment tends to rise. - Calvin Coolidge
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Unit 5: Full Employment. In the long run, the right answer to unemployment is to create more jobs. - George Walker Bush, Unemployment is of vital importance, particularly to the unemployed. - Edward Heath Business will be either better or worse. - PowerPoint PPT Presentation
Transcript of Unit 5: Full Employment
Unit 5: Full Employment
In the long run, the right answer to unemployment is to create more jobs.
- George Walker Bush,
Unemployment is of vital importance, particularly to the unemployed.
- Edward Heath
Business will be either better or worse.
When more and more people are thrown out of jobs, unemployment tends to rise.
- Calvin Coolidge
Society's Goals for Macro System
GrowthStable Prices & MoneyFull EmploymentStability of Business Cycle
Key Measures:
Unemployment RateLabor Force Participation RateEmployment-Population RateNet New Jobs CreateNew Unemployment ClaimsJobs-workers ratio
Unemployment in the U.S.
US Unemployment Data - BLS.gov
Analyzing employment
Population
AdultNon-InstitutionalCivilianPop. [A]
Not In Labor Force
RetiredDon't want employment nowIn SchoolDiscouraged - quit looking for work
Employed [C]
Unemployed [D] (Not Employed, But Actively Looking)
Labor Force [B] (willing & able to work)
Voluntary QuitInvoluntary QuitReturningNew Entrant
Institutional Pop.Children (<16)Active Duty Military
Defining “Adult Civilian Non-Institutionalized Population”
= labor force + not-in-labor-force = total population – institutionalized – active duty
military – children under age 16
Defining “Employed”: person is working regardless of type or num of hours/jobs.
Defining “Unemployed”: no job, but willing, able, and actively looking for work.
Defining Labor force:
unemployed + employed
Defining “Not-in-labor force:
retired, stay-at-home spouses, idle rich, non-working students, discouraged would-be workers (not looking)
Unemployment Rate:= Unemployed / Labor Force
Excludes discouraged workers
Labor Force Participation Rate:
= Labor Force / Civ.N-I Adult Pop.
= (employed + unemployed) / CivN-IA Pop
Employment Population Ratio
= employed / population
Why don’t the unemployed have a job right now? 4 Types of Unemployment:
Frictional: open job exists for each unemployed worker but they haven’t matched up yet
Structural: open jobs exist but require skills/locations that match workers’
Seasonal: temporary situation because job only exists during certain months of year.
Cyclical: more unemployed workers than available open jobs.
Policy Goal: ‘full employment’, but that doesn’t mean 0% rate.
NATURAL RATE OF UNEMPLOYMENT: economy at capacity with zero frictional unemployment.
Full Employment is usually defined as achieving the “natural rate” or zero cyclical.
