EMPLOYMENT… In Our Economy. Opportunity Costs How individuals spend their time… At work (income) At play (leisure) Decision: work vs. leisure = individuals.
Post on 02-Jan-2016
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Opportunity CostsOpportunity Costs• How individuals spend their time…
• At work (income)• At play (leisure)
• Decision:• work vs. leisure = individuals value
more
• How individuals spend their time…• At work (income)• At play (leisure)
• Decision:• work vs. leisure = individuals value
more
Employment / Productivity Living Standards
The employment rate and the rate of productivity determine the level of our living standard.
er + prod = standard of living
What does it mean to be employed or unemployed?
Employed - anyone with a full-time or a part-time job (vacation/sick)
Unemployed - Age 16 or older with no job but is actively looking for a job
Not in the Labor Force - Age 16 or older who are NOT looking for a job
(retired, in school, choose not to work, discouraged workers)
“in the labor force”
Individuals 16 or older either employed or unemployed
“not in the labor force”
Do NOT have job AND
NOT looking for work
(big difference between those who do not have a job and those who are not looking for a job!!)
Unemployment CategoriesJob leavers – Quit their job and immediately begin looking for work
New entrants– Never worked but are searching for work
Reentrants– Previously worked but were out of labor force before beginning their
job search
Job losers– Been fired or have been permanently laid off
Temporary layoffs– Temporarily released but expect to return to work within 6 months
Completed temporary jobs– Began looking for work after their temporary jobs ended
Unemployment Rate
# of unemployed / # in the labor force
(7,000 / 70,000 = .10 or 10%)
QuickTime™ and a decompressor
are needed to see this picture.
FRICTIONAL• Temp. gap between
jobs in healthy economy
• 1st time entering job force
• Quit job to look for better job (skills, training, etc)
FrictionalFactors vs. Solutions
Factors:
1. Young workers
2. Good unemployment benefits
Solutions:1. Reduce
unemployment benefits
2. Hire mature workers3. Agencies/networks
(head hunters)4. Retrain workers
CYCLICAL• Caused by
recession or downturn
• Less demand for g/s = less demand for workers
• Typically temporary until economy turns healthy again
Structural Solutions
• Lack of skills = new job at lower pay
• Focus on new industries/location for job
• Apply for unemployment benefits
• Training programs or retrained
• Early retirement
Frictional vs. StructuralFrictional
1. Supply side event (supply of labor)
2. Short-term problem (30-60 days)
3. Job seekers find new jobs/reenter market
Structural1. Demand side event
(demand for labor)
2. Long-term problem
3. Job seekers have to relocate or acquire new skills
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