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
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