ECO285 - Macroeconomics Dr. Dennis Foster - Spring 2014 The Nature and Concepts of Unemployment peak trough recovery contraction.

ECO285 - ECO285 - MacroeconomicsMacroeconomics

Dr. Dennis Foster - Spring 2014Dr. Dennis Foster - Spring 2014

The NatureThe Natureand Concepts and Concepts

of of UnemploymentUnemployment

peak

trough

recoverycontraction

Required reading The Unemployment Rate & Beyond.

Unemployment Insurance & moral hazard.

Reconciling survey data.

Taking the “Un” out of unemployment.

How the government measures unemployment.

Discouraged workers.

Shadow statistics unemployment rate.

Why is unemployment so high?

Deciphering the government’s data.

Why aren’t farmers counted?

UnemploymeUnemploymentnt

Measured rate depends on– the population,

– the civilian population,

– the civilian population over 16 yrs. old (&…),

– the labor force,

– and whether one is looking for work.

Jan 2014 - Getting from A to Z

317.5

162.0155.5 145.5

10.2

Who is unemployed?Who is unemployed?

To be unemployed, you have to be in the labor force and willing/able to work and looking for work. Who is not counted:– Full time student looking for a job.– Retirees looking for a job.– But, if either has a job, they are employed!

To be employed, you have to be working (!)– at least 1 hour during survey week, or– absent from work due to illness, vacation, strike.

Data – Numbers Employed

Unemployment rate by schooling

Unemployment duration, 1994-2014

Unemployment & the LFPR

Unemployment rate – 6 degrees of Unemployment rate – 6 degrees of separationseparation

Current data on the six U’s

A paradox about A paradox about unemploymentunemployment

Yes!!!Yes!!!

If the labor force is rising at the same time.If the labor force is rising at the same time.

For example: UFor example: Ur r = 5,000/100,000 = = 5,000/100,000 = 5%,5%,

and, now Uand, now Ur r = 7,500/110,000 = = 7,500/110,000 = 6.82%,6.82%,

Can the number of people Can the number of people employed rise at the same employed rise at the same time as the unemployment time as the unemployment

rate rises?rate rises?

Why do people get unemployed?

Data – seasonal adjustments

To remove the influence of predictable seasonal fluctuations, such as:– Students graduating in May and entering

the labor force.– Christmas shopping season and temporary

boost in employees.– Other seasonal activities – Snowbowl, Grand

Canyon, et al.– Weather-related effects on employment.– Other holiday effects.

All the data you see is adjusted.

ECO285 - ECO285 - MacroeconomicsMacroeconomics

Dr. Dennis Foster - Spring 2014Dr. Dennis Foster - Spring 2014

The NatureThe Natureand Concepts and Concepts

of of UnemploymentUnemployment

peak

trough

recoverycontraction