Unemployment

Unemployment
-Unemployment: percentage of people who do not have jobs, BUT are in the labor force
-Labor Force: number of people employed + number of people unemployed

• Those Who are Excluded from the Labor Force:

             -Kids
             -Military Personnel
             -Mentally insane
             -Prisoners
             -Stay at Home Parents
             -Full time students
             -Retired People
             -Discouraged Workers (just as it suggests: workers who have given up on finding a job)

Employed vs. Unemployed
-Employed  IF:
     *16 years of age or older with a job (full time or part time)
-Unemployed IF:
      *16 years of age or older without a job, BUT have been actively looking for a job for at LEAST 2 weeks

Unemployment Rate
-Formula: Number of unemployed   x 100
                   Labor Force
       *Standard Unemployment rate is between 4% and 5%

Types of Unemployment
    1. Seasonal- waiting for the right time to conduct business
          *Example: lifeguards, Mall Santa, school bus drivers, etc.
    2. Frictional- between jobs
         -new opportunities come up
         -change in educational level
         -change in lifestyle
         -change in choices
           *Example: Hollywood actress who can't find a job because their aren't any parts available (change in choices)
    3. Structural- associated with a lack of skills, change in technology, or a decline in industry
          *Example: Factory worker losses job because a machine was invented to do his job (change in technology)
    4. Cyclical- associated with downturns in the business cycle
         -Bad for society as well as individuals
         -Recession is in place
            *Example: Layoffs (companies can't afford to pay employees)
                   -Cyclical unemployment will equal zero IF an economy is operating on full employment (will NEVER occur)

For Visual Check This Video Out:

Full Employment (FE)
-Natural Rate of Unemployment (NRU) = 4-5%

Okun's Law
-Okun's Law: every 1% of unemployment above the NRU, causes a 2% decline Real GDP (RGDP)

Rule of 70
- Rule of 70: Estimate of the length it takes for price to double
     *Formula: Approximate number of years required to double real GDP =                 70                  
                                                                                              annual percentage rate of growth