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Employment & unemployment

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Intros
Lessons
  2. Unemployment Definition
    • A person actively looking for person
    • Unable to find Work
    • Why is unemployment a problem?
    • Lost incomes and human capital
  3. Population & Labor Force
    • Working-age Population
    • Labor force
    • What counts as unemployed
  4. Labor Market Indicators
    • Unemployment Rate
    • Employment-to-Population Ratio
    • Labor Force Participation Rate
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Examples
Lessons
    Topic Notes
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    Unemployment Definitions

    Unemployment: occurs when a person who is actively looking for employment is unable to find work.

    Note: Unemployment is usually used to measure the health of the economy.

    There are two reasons why unemployment is a problem
    1. Lost incomes and production: Losing a job means losing income as well as losing production. When there is lost production, there is a decrease in consumption and investments in capital. Overall, this leads to a lower standard of living in both the present and future.

    2. Lost human capital: When a person’s unemployment is lengthened, it permanently damages a person’s future job.

      Example: A doctor becomes unemployed and becomes a waiter. After 10 years, he realizes he won’t be able to find a job as a doctor because he cannot compete with new doctor graduates.

    Population & Labor Force

    Working-Age Population: the total number of people aged 16 years and over who are not in prison, hospital or some other form of institutional care.

    Labor Force: The sum of the employed and unemployed.

    Note: If you are neither employed or unemployed, then you are not in the labor force.

    To be unemployed, you must fulfill one of the following categories:
    1. Has no work, but has made efforts to find a job in the last four weeks
    2. Waiting to be called back from a job from which he/she was previously laid off.
    3. Starting a job within 30 days


    Labor Market Indicators

    There are three labor market indicators
    1. The Unemployment Rate: the extent in which people who want jobs but cannot find one. To calculate this, we use the following formula

      Unemployment Rate = Number  of  people  unemployedLabor  Force  ×100\frac{Number\; of\;people\;unemployed} {Labor\;Force} \; \times 100

    2. Employment-to-Population Ratio:is the percentage of people of working age who has jobs. To calculate this, we use the following formula

      Employment to Population Ratio = Number  of  people  employedWorking−  Age  Population  ×100\frac{Number\; of\;people\;employed} {Working-\;Age\;Population} \; \times 100

    3. Labor Force Participation Rate:he percentage of the working-age population who are members of the labor force. To calculate this, we use the following formula

      Labor Force Participation Rate = Labor  ForceWorking−  Age  Population  ×100\frac{Labor\; Force} {Working-\;Age\;Population} \; \times 100