Unemployment.pptVIP

* * * * * * * Macroeconomics Module 5 Unemployment Top Five Concepts Introduction This unit discusses the causes and problems associated with unemployment. You will also learn the types of unemployment and who is included when the unemployment rate is calculated. Did you know that some people who are unemployed may not be counted or included in the unemployment rate? Concept 1: The Labor Force The labor force consists of all persons over the age of 16 who are either working for pay or actively seeking paid employment. People who are not employed and not actively seeking employment are not counted as part of the labor force. Concept 1: The Labor Force The labor-force participation rate is the percentage of the working-age population working or seeking employment. Since 1960, the labor-force participation rate in the US has increased by 100%. The increase in the rate has come from the increased participation of women in the workforce. Concept 1: The Labor Force Increases in the labor force produces an outward shift in the production possibilities curve. Larger labor forces increase the capacity of the economy to produce goods and services. In order for the economy to be producing at it’s full capacity, the labor force must be fully employed. If the labor force participation rate is declining, it is an indication that the number of people working and/or actively seeking employment is declining. Concept 2: Unemployment Unemployment is the inability of labor-force participants to find jobs. As the labor force grows, making sure that all participants are fully employed becomes a critical issue. Okun’s Law states that for each additional 1 percent increase in unemployment there is a corresponding 2 percent decline in output (GDP). Concept 2: Unemployment The unemployment rate is the proportion of the labor force that is unemployed. To calculate the rate, you need to know the number of people unemployed and the number of people in the labor force.