Unemployment: percentage of people who do not have jobs, but are in labor force Labor force: Employed + Unemployment Not in labor force:   Kids  Military personnel  Mentally insane  Imprisoned  Stay-at-home-moms/dads  Full-time students  Retired people  Discouraged workers Employed: 16 years or older and have a job Unemployed: 16 years or older and don't have a job actively looking for a job for at least 2 weeks Unemployment rate [(# of unemployed)/(Labor force (# of employed + unemployed))]x100 Types of unemployment Seasonal: Waiting for right time to conduct business Ex: Mall santa, lifeguard, school bus driver, concession stand Frictional: New opportunities, change in educational level, change in lifestyle, change in choices, in between jobs Structural: Lack of skill, change in technology, declining industry Cyclical: Downturns in business cycle bad for society as well as individuals Recession Full employment (FE) NRU (Natural rate of unemployment) = 4-5% Okun's law: For every 1% of unemployment above the NRU, causes a 2% decline in Real GDP