Econ Notes: Unemployment

-the percentage of people who do not have a job but are in the labor force

Labor Force
employed and unemployed people

1. Unemployed
• kids
• military personnel
• the mentally insane
• those in prison
• stay-at-home moms/dads
• full-time students
• retired people
• the discouraged (those who have tried, but cannot find a job)
2. Employed
• 16 yrs. old and over who are working either part- or full- time
• 16 yrs. old and over who don't have a job but have actively searched for one in the past 2 weeks

Types of Unemployment

1. Seasonal: waiting on the correct season to conduct business 
• ex: the Mall Santa, lifeguards, bus drivers
2. Frictional: "in-between jobs" maybe due to change in choices, education, or lifestyle
3. Structural: Δ in skills or Δ in technology
   ex: old NASA workers unable to find jobs because they're most useful skill was working on rockets, not car engines
4. Cyclical: associated with downturns in business cycles, bad for society as well as individuals (recession is in place)

Calculating Unemployment Rate

Unemployed ÷ (Unemployed + Employed) × 100

1. Full Employment (FE)
• NRU (Natural Rate of Unemployment) ideal = 4% to 5%
2. Okun's Law
• for every 1% of unemployment that is above the NRU, it causes a 2% decline in Real GDP
3. The Rule of 70
• the length of time it takes to double the price level