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68 Cards in this Set
- Front
- Back
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Unemployment rate =
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# of people unemployed
----------------------- x 100 Labor Force |
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Labor Force Participation Rate
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Labor Force
--------------------- x 100 Working-Age Population |
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Working Age population
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total # of people 16 years and over who are not institutionalized or in the army
(empl., unempl, NIWF) |
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Labor Force Participation Rate in US in 2005 was:
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66%
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Unemployment Rate in US in 2005 was:
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5.9%
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Labor Force
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# of people employed
+ # unemployed |
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Unemployment during the 1960's
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-fell to 3.5% due to defense production during Vietnam war
-increased consumer spending and social programs |
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Between 1965-1999 Women in Labor Force Increased due to:
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1) More women college educated
2) Tech. change in the workplace created more white collar jobs with felxible work hours women found nice 3)Tech. change in the home increased the time available for paid employment 4)Families wanted a second income to balance tight budgets |
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Between 1965-2005 Men in Labor Force Decreased due to:
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1) Older men retired earlier
2) Job Loss at age where finding new job is harder 3) More remained in full-time education |
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Sources of Unemployment
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1) Job Losers
2) Job Leavers 3) Entrants or Reentrants |
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People who end Unemployment are:
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1) Hires and Recalls
2) Withdrawls |
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Job Losers are:
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biggest group whos # fluctuates the most
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Entrants and Reentrants are:
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second biggest group, # also fluctuates
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Job Leavers are:
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smallest group, # fluctuates the least
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Frictional Unemployment ex:
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ex: new grad student looking for a job
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Structural Unemployment ex:
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ex: telephone operators lose jobs due to computer, have to retrain to get hired again
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Seasonal Unemployment ex:
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ex: fruit picker laid off for winter and re-hired in spring
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Cyclical Unemployment ex:
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ex: auto worker laid off due to recession in economy and rehired months later
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When real GDP is below Potential GDP:
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The unemployment rate is above the natural rate
(1982, 1992, 2002) |
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Inflation Rate=
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(CPI current yr - CPI previous yr)
--------------------- x 100 CPI Previous yr |
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CPI=
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Cost of CPI Basket at current period prices
--------------------- x 100 Cost of CPI basket at base period prices |
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Current Prices =
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amount of item x current costs for item
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Real Wage (Price) Rate=
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Nominal Wage Rate for yr
----------------------- x 100 CPI in yr |
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Real Interest Rate =
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Nominal Interest Rate - Inflation Rate
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Inflation Rate =
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Amt change in the price
from one year to next ---------------------- x 100 First yr price |
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Increase Population that is working age =
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HIGHER unemployment rate
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MODEST restructuring
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LOWER unemployment rates
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HIGH restructuring
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HIGH unemployment rates
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HIGH Unemployment benefits=
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HIGH unempl. rates
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HIGH Min. wage =
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HIGH Unempl. rates
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Strong Labor Unions =
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HIGH Unempl. rates
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Weak Labor Unions =
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Low Unempl. rates
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HIGH Labor Force =
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greater level of potential GDP, lower wage rate, lower natural unemployment rate
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Employed
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-Work more than 1 hr. paid
-Work more than 15 hrs. unpaid in family biz - temporarily away |
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Unemployed
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- Not employed
- available for work - looked for job in past 4 weeks - awaiting recall to job |
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Not In Work Force (NIWF)
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Not employed or Unemployed
ex: student, retired |
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Employment Rate =
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Employed
----------------------- Working age population |
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Frictional Unemployment
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-labor force changing
- arises from normal labor turnover |
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Structural Unemployment
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- economy changes
- change in tech. or international competition change skills or location of job |
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Seasonal Unemployment
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- arises from seasonal weather patterns
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Structural and
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Cyclical usually go together
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Cyclical Unemployment
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- refers to business cycle
- increases during recession and decreases during expansion |
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"Full Employment" =
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No cyclical unemployment
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"Natural Unemployment" =
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Economy at "Potential GDP"
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To keep unemployment steady
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need to expand at 2% growth
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Current Unemployment Rate =
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4.6
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Why is Unemployment what it is?
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1) Job Search
2) Demographics 3) Unemployment Benefits 4) Structural Change |
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Job Rationing
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- wage floor holds constant and more people want to work than jobs available
1) Min. Wage 2)Union Wage 3) Efficiency Wage |
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Gas Prices
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Are inflation cuz they cause other prices to go up as well
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CPI Weights
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-housing is most
-Transportation second |
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Current CPI
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208.3
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Real Price =
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Nominal Price of (yr.)
--------------------- x 100 CPI of (yr.) |
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Previous Price in Current Year $$$ =
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Nominal Price x (CPI Now)
--------- (CPI Then) |
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Real =
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nominal - inflation
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GDP Deflator
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covers whole economy
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Boskin Commission
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CPI overstates it by 1.1%
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CPI doesn't consider
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-quality changes
- New Goods come along - driven by prices |
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Real =
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nominal - inflation
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GDP Deflator
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covers whole economy
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Boskin Commission
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CPI overstates it by 1.1%
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CPI doesn't consider
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-quality changes
- New Goods come along - driven by prices |
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Withdrawls
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someone who has been unemployed and stops looking for a job
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Hire
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someone who has been unemployed and starts a new job
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Recall
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someone who is temporarily laid off and started work again
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Entrant
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someone who has just left school and is looking for a job
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Job Leaver
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voluntarily quits a job
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Job Loser
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fired from job permanantely or temporarily
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Reentrant
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previously had a job, quit and left labor force, and is now looking for a job again
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