Ch 13 UNEMPLOYMENT

UNEMPLOYMENT

httpwatchwwwyoutubecomv=_CdTu1pk06wamplist=PLF2A3693D8481F442

UNEMPLOYMENT

httpwatchwwwyoutubecomv=_CdTu1pk06wamplist=PLF2A3693D8481F442

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Macroeconomic Objectives

Full Employment

Low Inflation

Economic Growth

Income Distribution

Meaning of unemployment

UNEMPLOYMENTIs the condition of

someone of working age (16-64) who is willing and able to work actively seeking employment but unable to find a job

Unemployment rate (UR) calculations UR = number of unemployed x

100 labor force

Unemployment rate is the percentage of the total labor force in a nation that is unemployed

Labor Force Itrsquos the sum of EMPLOYED and UNEMPLOYED

persons aged 16-64 (age range may vary from nation to nation)

Persons who are neither employed nor seeking employment are not in the labor force Retired persons Students Those taking care of children or other family

members Others who are neither working nor seeking

work

Examples of people who are part of the labor

force and who are not part of the labor force

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Meaning of unemployment

UNEMPLOYMENTIs the condition of

someone of working age (16-64) who is willing and able to work actively seeking employment but unable to find a job

Unemployment rate (UR) calculations UR = number of unemployed x

100 labor force

Unemployment rate is the percentage of the total labor force in a nation that is unemployed

Labor Force Itrsquos the sum of EMPLOYED and UNEMPLOYED

persons aged 16-64 (age range may vary from nation to nation)

Persons who are neither employed nor seeking employment are not in the labor force Retired persons Students Those taking care of children or other family

members Others who are neither working nor seeking

work

Examples of people who are part of the labor

force and who are not part of the labor force

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Unemployment rate (UR) calculations UR = number of unemployed x

100 labor force

Unemployment rate is the percentage of the total labor force in a nation that is unemployed

Labor Force Itrsquos the sum of EMPLOYED and UNEMPLOYED

persons aged 16-64 (age range may vary from nation to nation)

Persons who are neither employed nor seeking employment are not in the labor force Retired persons Students Those taking care of children or other family

members Others who are neither working nor seeking

work

Examples of people who are part of the labor

force and who are not part of the labor force

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Labor Force Itrsquos the sum of EMPLOYED and UNEMPLOYED

persons aged 16-64 (age range may vary from nation to nation)

Persons who are neither employed nor seeking employment are not in the labor force Retired persons Students Those taking care of children or other family

members Others who are neither working nor seeking

work

Examples of people who are part of the labor

force and who are not part of the labor force

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Examples of people who are part of the labor

force and who are not part of the labor force

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Part of the labor force because she is employed

A part-time retail sales clerk who is also going to college

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

NOT part of the labor force because she is not employed nor seeking employment

A stay-at-home mother

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

NOT part of the labor force because although he is working he is not formally employed nor is he seeking employment

A college graduate who volunteers in a community center

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Part of the labor force because he is employed

A full-time nurse

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Part of the labor force because he is unemployed

A factory worker whose plant closed and who is applying for jobs at other firms

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

NOT part of the labor force because he is no longer seeking employment

A discouraged worker who has been looking for a job for 18 months but has given up the job search

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

NOT part of the labor force because he is not currently seeking employment

An engineer who goes back to school to earn a teaching degree

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Part of the labor force because she is unemployed

A recent college graduate interviewing at different companies for her first job

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Labor force participation rate (LFPR)

Is the proportion of the working-age population that is either unemployed or employed (Ratio of the number of people in the labor force to the entire working-age population of a nation)

LFPR = labor force x 100

working age population

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

If the LFPR drops it may be because people have chosen to give up searching for jobs or they have decided to retire early or go back to school

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Labor force participation rate (LFPR)

LFPR = labor force x 100

working age population

A decline in LFPR can cause the unemployment rate to understate the true number of people out of work in a nation

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

LFPR is an important determinant of its potential for economic growth

The greater the proportion of the working-age population that is in the labor forcehellip

The greater a nationrsquos production possibilitieshellip

Since the main factor that can increase a nationrsquos PPC is the quantity of resources

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Article published by the International Committee of the Fourth International (ICFI) - - ldquoUnemployed workers in these states will see the maximum duration of their unemployment benefits cut from 99 weeks to between 73 and 79 weeks depending on the staterdquo

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Supply side policies that will promote a growth in the LFPR

Reduction in unemployment and social security benefits

Improved access to public education and job training for all members of society

Other policies that encourage and enable people of working age to enter the labor force and become productive members of society

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Shortcomings of the unemployment rate as a

measure of economic health Changes in the labor force participation rate make

the unemployment rate appear lower than it really is

Individualrsquos status as lsquoemployedrsquo does not take into account the number of hours or the type of employment the individual is experiencing (underemployment)

People stuck in jobs for which they are over qualified are also considered employed (underemployment)

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

Underemployment vs Unemployment

Underemployment is the condition of a worker who is technically employed but is either over-qualified for the type of work he or she is doing or is working part-time when full-time work is desired

Underemployment is not accounted for in unemployment figures this helps explain why the unemployment rate is an imperfect measure of a nationrsquos macroeconomic reality

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

FoxNews Unemployment

April 5th news httpvideofoxnewscomv2280557079001

HL Calculations Questions

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

a Calculate the number of people in country Xrsquos labor force

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

a Calculate the number of people in country Xrsquos labor force

Country Xrsquos labor force is 42 million people (70 x 60 million) The other 18 million (60-42 million) can be assumed to be students not willing or able to work prisoners or other adults who are not part of the labor force

HL Calculations Questions

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

UR = of labor force who are unemployed Assuming 39 million of the 42 million in the labor force are employed the unemployed population is 3 million peopleUR = (342) x 100 = 00714 x 100 = 714

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

a Calculate the number of people in country Xrsquos labor force

Country Xrsquos labor force is 42 million people (70 x 60 million) The other 18 million (60-42 million) can be assumed to be students not willing or able to work prisoners or other adults who are not part of the labor force

HL Calculations Questions

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

UR = of labor force who are unemployed Assuming 39 million of the 42 million in the labor force are employed the unemployed population is 3 million peopleUR = (342) x 100 = 00714 x 100 = 714

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

UR = of labor force who are unemployed Assuming 39 million of the 42 million in the labor force are employed the unemployed population is 3 million peopleUR = (342) x 100 = 00714 x 100 = 714

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

In country X there are 60 million people of working age Of these 70 are available for work while 39 million are currently employed

b Calculate country Xrsquos unemployment rate

UR = of labor force who are unemployed Assuming 39 million of the 42 million in the labor force are employed the unemployed population is 3 million peopleUR = (342) x 100 = 00714 x 100 = 714

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

a Calculate the new labor force participation rate (percentage of working-age population in the labor force) in country X

LFPR = (4465) x 100 = 0677 x 100 = 677

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

Assume immigration increases the number of people of working age in country X to 65 million while the labor force increases to 44 million

b Assume unemployment is now 9 How many unemployed people are there in country X

UR = of people unemployed number of people in the labor force Therefore with UR = 9 number of people unemployed = 9 of labor force44 million x 09 = 396 million people unemployed

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

1 Calculate Switzerlandrsquos LFPR

42624351 5175054 = 0824 x 100 = 824

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

2 Calculate Switzerlandrsquos UR

153518 42624351 = 0036 x 100 = 36

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

3 Calculate Spainrsquos LFPR

219508109 31141200 = 0704 x 100 = 704

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Questions

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

HL Calculations Answer

SWITZERLAND

SPAIN

Population aged 15-64 (total)

5175054 31141200

Unemployed persons (total)

153518 1821917

Labor force (total) 42624351 219508109

4 Calculate Spainrsquos UR

1821917 219508109 = 0083 x 100 = 83

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

In 2008 the size of the US working-age population was approx 225 million people

Jan 2008 LFPR = 662

662 of the working age population were either

employed or unemployed

Labor force = 149 million (225 x 662)

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

In 2008 the size of the US working-age population was approx 225 million people

Unemployment = 5Number of Americans would have been

considered unemployed in January 2008 =

75 millions (149 Mill in labor force x 5)

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

In 2008 the size of the US working-age population was approx 225 million people

Dec 2009 LFPR = 646

Labor force = 1453 million (225 x 646) About 37 million people left the labor force

since January 2008 (149 million ndash 1453 million)

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

In 2008 the size of the US working-age population was approx 225 million people

Jan 2009 unemployment rate 10Number of Americans would have been

considered unemployed in January 2009 =

145 millions (1453 Mill in labor force x 10)

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Summary Labor force at the beg of 2008 = 149 M Labor force at the end of 2009 = 1453 M No of people who left the LF between Jan

2008 and Dec 2009 = 37 M

Note the 2 decline in LFPR is most likely explained by the decision of unemployed Americans to give up searching for work and drop out of the labor force If these individuals had persisted and continued to fail in their pursuit of a job then an additional 37 million Americans would have been counted as unemployed

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Consequences of unemployment

Individual consequences of unemployment

Decreased household income and purchasing power

Increased levels of psychological and physical illness including stress and depression

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Consequences of unemployment

Social consequences of unemployment

Downward pressure on wages for the employed

Increased poverty and crime

Transformation of traditional societies

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment

1 Lower level of ADUnemployment lowers householdrsquos

disposable incomeReduces consumptionReduces level of demand and output

in the nation as a wholeLeads to more unemploymentCan pull the economy into a

recession

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment

2 Under-utilization of the nationrsquos resource

Unemployment means a nation is not fully utilizing its productive resources

Nation with high unemployment is producing within its PPC at a level below that which is most beneficial to an economy

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment

3 Brain-drain

Skilled workers choosing to leave the country with high unemployment if job opportunities are abundant elsewhere

This further leads to a fall in the production possibilities of the nation with high unemployment

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment

4 A turn towards protectionism and isolationist policies

Rise of protective tariffs and quotas or increased government spending on subsidies for domestic producers

Such policies lead to a misallocation of societyrsquos scarce resources and in the long run will make the nation less competitive in global markets

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment

5 Increased budget deficits

High unemployment reduces tax revenues flowing to a government while increasing public expenditures on financial support for the unemployed

Result in decrease government spending on public goods (infrastructures education defense healthcare) or an increase in government borrowing to finance its budget deficit

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment (TF)

Higher level of AD

FALSELower level of AD

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment (TF)

Over-utilization of the nationrsquos resources

FALSEUnder-utilization of the nationrsquos resources

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment (TF)

Brain-dead

FALSEBrain-drain

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment (TF)

A turn towards protectionism and isolationist policies

True

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Economic consequences of unemployment (TF)

Decreased budget deficits

FALSEIncreased budget deficits

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of unemploymentFrictional unemployment

Seasonal unemployment

Structural unemployment

Cyclical unemployment

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Frictional Unemployment DescriptionPeople who are in between jobs

Looking for their first jobVery short term (3 months or less)

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Frictional Unemployment CausesYoung workers entering the labor force for the first time

Workers who voluntarily quit to seek better job opportunities

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Frictional Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Seasonal Unemployment DescriptionSeasonal workers who need to seek other work between seasons

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Seasonal Unemployment CausesWorkers choosing jobs that allow for flexibility of time and location

Such unemployment is considered voluntary

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Seasonal Unemployment Possible solutionImprove information symmetry between employers and job seekers

Reduce unemployment benefits

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Structural Unemployment DescriptionWorkers unable to find work because their skills do not match those demanded by firms

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Structural Unemployment CausesGlobalizationOutsourcing of secondary and tertiary sector jobs

New technologies that automate processes which used to require labor

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Structural Unemployment Possible solutionImprove training education and mobility of labor force to encourage relocation as demands for labor change in regional areas

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Cyclical Unemployment DescriptionWorkers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Cyclical Unemployment CausesFall in consumption investment or net exports reduces demand for labor

Employment falls as the nationrsquos output falls

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Cyclical Unemployment Possible solutionImplementation of fiscal or monetary stimulus aimed at increasing the level of AD and raising the nationrsquos output and employment

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Natural Rate of Unemployment DescriptionUnemployment occurring when an economy is producing full-employment output level

Structural + seasonal + frictional unemployment

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Natural Rate of Unemployment CausesNRU is caused by the natural changes and shifting of resources in the economy and is considered a healthy and desirable level of unemployment

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Natural Rate of Unemployment Possible solutionA nationrsquos NRU can be reduced via government policy aiming to increase productivity of the labor force and create incentives to accept work

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

People who are in between jobs or looking for their first job

Frictional Unemployment

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers unable to find work because a reduction in private and public spending reduces AD

Cyclical Unemployment(Demand-Deficient)

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers who need to seek other work between seasons

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers who need to seek other work between seasons

Seasonal Unemployment

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Workers unable to find work because their skills do not match those demanded by firms

Structural Unemployment

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Types of Unemployment

Description

Unemployment occurring when an economy is producing full-employment output level

Natural Rate of Unemployment (NRU)

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

TYPES OF UNEMPLOYMENT

httpwwwyoutubecomwatchv=ZckAN1KYB5Iamplist=PLF2A3693D8481F442

Cyclical unemployment arises from a fall in aggregate demand

PL

Real GDP

YFE

PE

AD1

SRAS

LRAS

bull At YFE the nation experiences very low unemployment stable prices (meaning low inflation) nationrsquos resources are being used efficiently and near their full capacity towards the production of GampS

Cyclical unemployment arises from a fall in aggregate demand

PL

Real GDP

YFE Y1

PE

P1

AD1

AD2

SRAS

LRAS

bull A fall in AD small decrease in price level large decrease in output

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical UE NRU

• Slide 1
• Ch 13 UNEMPLOYMENT
• UNEMPLOYMENT
• TYPES OF UNEMPLOYMENT
• Macroeconomic Objectives
• Meaning of unemployment
• Unemployment rate (UR) calculations
• Labor Force
• Examples of people who are part of the labor force and who are
• Part of the labor force because she is employed
• NOT part of the labor force because she is not employed nor see
• NOT part of the labor force because although he is working he
• Part of the labor force because he is employed
• Part of the labor force because he is unemployed
• NOT part of the labor force because he is no longer seeking emp
• NOT part of the labor force because he is not currently seeking
• Part of the labor force because she is unemployed
• Labor force participation rate (LFPR)
• Labor force participation rate (LFPR) (2)
• Labor force participation rate (LFPR) (3)
• LFPR is an important determinant of its potential for economic
• Supply side policies that will promote a growth in the LFPR
• Supply side policies that will promote a growth in the LFPR (2)
• Shortcomings of the unemployment rate as a measure of economic
• Underemployment vs Unemployment
• FoxNews Unemployment
• HL Calculations Questions
• HL Calculations Answer
• HL Calculations Questions (2)
• HL Calculations Answer (2)
• HL Calculations Questions (3)
• HL Calculations Answer (3)
• HL Calculations Questions (4)
• HL Calculations Answer (4)
• HL Calculations Questions (5)
• HL Calculations Answer (5)
• HL Calculations Questions (6)
• HL Calculations Answer (6)
• HL Calculations Questions (7)
• HL Calculations Answer (7)
• HL Calculations Questions (8)
• HL Calculations Answer (8)
• In 2008 the size of the US working-age population was approx
• In 2008 the size of the US working-age population was approx (2)
• In 2008 the size of the US working-age population was approx (3)
• In 2008 the size of the US working-age population was approx (4)
• Summary
• Consequences of unemployment
• Consequences of unemployment (2)
• Economic consequences of unemployment
• Economic consequences of unemployment (2)
• Economic consequences of unemployment (3)
• Economic consequences of unemployment (4)
• Economic consequences of unemployment (5)
• Economic consequences of unemployment (TF)
• Economic consequences of unemployment (TF) (2)
• Economic consequences of unemployment (TF) (3)
• Economic consequences of unemployment (TF) (4)
• Economic consequences of unemployment (TF) (5)
• Types of unemployment
• Frictional Unemployment Description
• Frictional Unemployment Causes
• Frictional Unemployment Possible solution
• Seasonal Unemployment Description
• Seasonal Unemployment Causes
• Seasonal Unemployment Possible solution
• Structural Unemployment Description
• Structural Unemployment Causes
• Structural Unemployment Possible solution
• Cyclical Unemployment Description
• Cyclical Unemployment Causes
• Cyclical Unemployment Possible solution
• Natural Rate of Unemployment Description
• Natural Rate of Unemployment Causes
• Natural Rate of Unemployment Possible solution
• Types of Unemployment
• Types of Unemployment (2)
• Types of Unemployment (3)
• Types of Unemployment (4)
• Types of Unemployment (5)
• Types of Unemployment (6)
• Types of Unemployment (7)
• Types of Unemployment (8)
• Types of Unemployment (9)
• Types of Unemployment (10)
• TYPES OF UNEMPLOYMENT (2)
• Cyclical unemployment arises from a fall in aggregate demand
• Cyclical unemployment arises from a fall in aggregate demand (2)
• Cyclical unemployment arises from a fall in aggregate demand (3)
• Cyclical unemployment arises from a fall in aggregate demand (4)

Cyclical unemployment arises from a fall in aggregate demand

PL

Real GDP

YFE Y1

PE

P1

AD1

AD2

SRAS

LRAS

bull A fall in AD small decrease in price level large decrease in output

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical UE NRU

• Slide 1
• Ch 13 UNEMPLOYMENT
• UNEMPLOYMENT
• TYPES OF UNEMPLOYMENT
• Macroeconomic Objectives
• Meaning of unemployment
• Unemployment rate (UR) calculations
• Labor Force
• Examples of people who are part of the labor force and who are
• Part of the labor force because she is employed
• NOT part of the labor force because she is not employed nor see
• NOT part of the labor force because although he is working he
• Part of the labor force because he is employed
• Part of the labor force because he is unemployed
• NOT part of the labor force because he is no longer seeking emp
• NOT part of the labor force because he is not currently seeking
• Part of the labor force because she is unemployed
• Labor force participation rate (LFPR)
• Labor force participation rate (LFPR) (2)
• Labor force participation rate (LFPR) (3)
• LFPR is an important determinant of its potential for economic
• Supply side policies that will promote a growth in the LFPR
• Supply side policies that will promote a growth in the LFPR (2)
• Shortcomings of the unemployment rate as a measure of economic
• Underemployment vs Unemployment
• FoxNews Unemployment
• HL Calculations Questions
• HL Calculations Answer
• HL Calculations Questions (2)
• HL Calculations Answer (2)
• HL Calculations Questions (3)
• HL Calculations Answer (3)
• HL Calculations Questions (4)
• HL Calculations Answer (4)
• HL Calculations Questions (5)
• HL Calculations Answer (5)
• HL Calculations Questions (6)
• HL Calculations Answer (6)
• HL Calculations Questions (7)
• HL Calculations Answer (7)
• HL Calculations Questions (8)
• HL Calculations Answer (8)
• In 2008 the size of the US working-age population was approx
• In 2008 the size of the US working-age population was approx (2)
• In 2008 the size of the US working-age population was approx (3)
• In 2008 the size of the US working-age population was approx (4)
• Summary
• Consequences of unemployment
• Consequences of unemployment (2)
• Economic consequences of unemployment
• Economic consequences of unemployment (2)
• Economic consequences of unemployment (3)
• Economic consequences of unemployment (4)
• Economic consequences of unemployment (5)
• Economic consequences of unemployment (TF)
• Economic consequences of unemployment (TF) (2)
• Economic consequences of unemployment (TF) (3)
• Economic consequences of unemployment (TF) (4)
• Economic consequences of unemployment (TF) (5)
• Types of unemployment
• Frictional Unemployment Description
• Frictional Unemployment Causes
• Frictional Unemployment Possible solution
• Seasonal Unemployment Description
• Seasonal Unemployment Causes
• Seasonal Unemployment Possible solution
• Structural Unemployment Description
• Structural Unemployment Causes
• Structural Unemployment Possible solution
• Cyclical Unemployment Description
• Cyclical Unemployment Causes
• Cyclical Unemployment Possible solution
• Natural Rate of Unemployment Description
• Natural Rate of Unemployment Causes
• Natural Rate of Unemployment Possible solution
• Types of Unemployment
• Types of Unemployment (2)
• Types of Unemployment (3)
• Types of Unemployment (4)
• Types of Unemployment (5)
• Types of Unemployment (6)
• Types of Unemployment (7)
• Types of Unemployment (8)
• Types of Unemployment (9)
• Types of Unemployment (10)
• TYPES OF UNEMPLOYMENT (2)
• Cyclical unemployment arises from a fall in aggregate demand
• Cyclical unemployment arises from a fall in aggregate demand (2)
• Cyclical unemployment arises from a fall in aggregate demand (3)
• Cyclical unemployment arises from a fall in aggregate demand (4)

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical UE NRU

• Slide 1
• Ch 13 UNEMPLOYMENT
• UNEMPLOYMENT
• TYPES OF UNEMPLOYMENT
• Macroeconomic Objectives
• Meaning of unemployment
• Unemployment rate (UR) calculations
• Labor Force
• Examples of people who are part of the labor force and who are
• Part of the labor force because she is employed
• NOT part of the labor force because she is not employed nor see
• NOT part of the labor force because although he is working he
• Part of the labor force because he is employed
• Part of the labor force because he is unemployed
• NOT part of the labor force because he is no longer seeking emp
• NOT part of the labor force because he is not currently seeking
• Part of the labor force because she is unemployed
• Labor force participation rate (LFPR)
• Labor force participation rate (LFPR) (2)
• Labor force participation rate (LFPR) (3)
• LFPR is an important determinant of its potential for economic
• Supply side policies that will promote a growth in the LFPR
• Supply side policies that will promote a growth in the LFPR (2)
• Shortcomings of the unemployment rate as a measure of economic
• Underemployment vs Unemployment
• FoxNews Unemployment
• HL Calculations Questions
• HL Calculations Answer
• HL Calculations Questions (2)
• HL Calculations Answer (2)
• HL Calculations Questions (3)
• HL Calculations Answer (3)
• HL Calculations Questions (4)
• HL Calculations Answer (4)
• HL Calculations Questions (5)
• HL Calculations Answer (5)
• HL Calculations Questions (6)
• HL Calculations Answer (6)
• HL Calculations Questions (7)
• HL Calculations Answer (7)
• HL Calculations Questions (8)
• HL Calculations Answer (8)
• In 2008 the size of the US working-age population was approx
• In 2008 the size of the US working-age population was approx (2)
• In 2008 the size of the US working-age population was approx (3)
• In 2008 the size of the US working-age population was approx (4)
• Summary
• Consequences of unemployment
• Consequences of unemployment (2)
• Economic consequences of unemployment
• Economic consequences of unemployment (2)
• Economic consequences of unemployment (3)
• Economic consequences of unemployment (4)
• Economic consequences of unemployment (5)
• Economic consequences of unemployment (TF)
• Economic consequences of unemployment (TF) (2)
• Economic consequences of unemployment (TF) (3)
• Economic consequences of unemployment (TF) (4)
• Economic consequences of unemployment (TF) (5)
• Types of unemployment
• Frictional Unemployment Description
• Frictional Unemployment Causes
• Frictional Unemployment Possible solution
• Seasonal Unemployment Description
• Seasonal Unemployment Causes
• Seasonal Unemployment Possible solution
• Structural Unemployment Description
• Structural Unemployment Causes
• Structural Unemployment Possible solution
• Cyclical Unemployment Description
• Cyclical Unemployment Causes
• Cyclical Unemployment Possible solution
• Natural Rate of Unemployment Description
• Natural Rate of Unemployment Causes
• Natural Rate of Unemployment Possible solution
• Types of Unemployment
• Types of Unemployment (2)
• Types of Unemployment (3)
• Types of Unemployment (4)
• Types of Unemployment (5)
• Types of Unemployment (6)
• Types of Unemployment (7)
• Types of Unemployment (8)
• Types of Unemployment (9)
• Types of Unemployment (10)
• TYPES OF UNEMPLOYMENT (2)
• Cyclical unemployment arises from a fall in aggregate demand
• Cyclical unemployment arises from a fall in aggregate demand (2)
• Cyclical unemployment arises from a fall in aggregate demand (3)
• Cyclical unemployment arises from a fall in aggregate demand (4)

Cyclical unemployment arises from a fall in aggregate demand

WL

Qty of Labor

QFE Q1

WE

ADL1

ADL2

ASL TLF

QTLF

Cyclical UE NRU

• Slide 1
• Ch 13 UNEMPLOYMENT
• UNEMPLOYMENT
• TYPES OF UNEMPLOYMENT
• Macroeconomic Objectives
• Meaning of unemployment
• Unemployment rate (UR) calculations
• Labor Force
• Examples of people who are part of the labor force and who are
• Part of the labor force because she is employed
• NOT part of the labor force because she is not employed nor see
• NOT part of the labor force because although he is working he
• Part of the labor force because he is employed
• Part of the labor force because he is unemployed
• NOT part of the labor force because he is no longer seeking emp
• NOT part of the labor force because he is not currently seeking
• Part of the labor force because she is unemployed
• Labor force participation rate (LFPR)
• Labor force participation rate (LFPR) (2)
• Labor force participation rate (LFPR) (3)
• LFPR is an important determinant of its potential for economic
• Supply side policies that will promote a growth in the LFPR
• Supply side policies that will promote a growth in the LFPR (2)
• Shortcomings of the unemployment rate as a measure of economic
• Underemployment vs Unemployment
• FoxNews Unemployment
• HL Calculations Questions
• HL Calculations Answer
• HL Calculations Questions (2)
• HL Calculations Answer (2)
• HL Calculations Questions (3)
• HL Calculations Answer (3)
• HL Calculations Questions (4)
• HL Calculations Answer (4)
• HL Calculations Questions (5)
• HL Calculations Answer (5)
• HL Calculations Questions (6)
• HL Calculations Answer (6)
• HL Calculations Questions (7)
• HL Calculations Answer (7)
• HL Calculations Questions (8)
• HL Calculations Answer (8)
• In 2008 the size of the US working-age population was approx
• In 2008 the size of the US working-age population was approx (2)
• In 2008 the size of the US working-age population was approx (3)
• In 2008 the size of the US working-age population was approx (4)
• Summary
• Consequences of unemployment
• Consequences of unemployment (2)
• Economic consequences of unemployment
• Economic consequences of unemployment (2)
• Economic consequences of unemployment (3)
• Economic consequences of unemployment (4)
• Economic consequences of unemployment (5)
• Economic consequences of unemployment (TF)
• Economic consequences of unemployment (TF) (2)
• Economic consequences of unemployment (TF) (3)
• Economic consequences of unemployment (TF) (4)
• Economic consequences of unemployment (TF) (5)
• Types of unemployment
• Frictional Unemployment Description
• Frictional Unemployment Causes
• Frictional Unemployment Possible solution
• Seasonal Unemployment Description
• Seasonal Unemployment Causes
• Seasonal Unemployment Possible solution
• Structural Unemployment Description
• Structural Unemployment Causes
• Structural Unemployment Possible solution
• Cyclical Unemployment Description
• Cyclical Unemployment Causes
• Cyclical Unemployment Possible solution
• Natural Rate of Unemployment Description
• Natural Rate of Unemployment Causes
• Natural Rate of Unemployment Possible solution
• Types of Unemployment
• Types of Unemployment (2)
• Types of Unemployment (3)
• Types of Unemployment (4)
• Types of Unemployment (5)
• Types of Unemployment (6)
• Types of Unemployment (7)
• Types of Unemployment (8)
• Types of Unemployment (9)
• Types of Unemployment (10)
• TYPES OF UNEMPLOYMENT (2)
• Cyclical unemployment arises from a fall in aggregate demand
• Cyclical unemployment arises from a fall in aggregate demand (2)
• Cyclical unemployment arises from a fall in aggregate demand (3)
• Cyclical unemployment arises from a fall in aggregate demand (4)