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Chapter 14 Vocab
| Term | Definition |
|---|---|
| unemployed | The condition of not having a job but being a member of the labor force. To be considered unemployed, a person must be jobless yet actively searching for a job by having searched in the last four weeks. |
| unemployment rate | The unemployment rate is equal to the number of unemployed persons divided by the number of people in the labor force. |
| employed | The condition of having a job. |
| labor force | The number of employed plus unemployed people age sixteen and over. |
| labor force participation rate | The labor force divided by the working age population. |
| employment-to-population ratio | The number of employed people divided by the working age population. |
| marginally attached workers | These people are ready and available to work who have conducted a job search within the past twelve months but have not searched in the last four weeks and are therefore not included in official unemployment statistics. |
| discouraged workers | People who, for whatever reason, have given up the job search and are not officially classified as unemployed. The presence of discouraged workers in the economy means that the official unemployment rate understates actual employment. |
| U1 | The unemployment rate that only includes people unemployed fifteen weeks or longer, as published by the BLS. |
| U2 | The unemployment rate that only includes people who have lost a job as opposed to those who have quit of those who have entered or reentered the labor force, as published by the BLS. |
| U3 | The official unemployment rate published by the BLS. |
| U4 | The unemployment rate that adds discouraged workers to the official unemployment rate, as published by the BLS. |
| U5 | The unemployment rate that includes all marginally attached workers, as published by the BLS. |
| U6 | The most all-inclusive measure of unemployment as published by the BLS. Includes all those listed in U1-U5 plus those who are employed part time because of economic reasons. |
| frictional unemployment | Voluntary unemployment that occurs when a person enters the labor force and looks for a job. A recent graduate looking for her first job out of college would be considered frictional unemployment. Always exists in an economy. |
| structural unemployment | Unemployment that is caused by the permanent destruction of jobs in a dying industry, a mismatch between the skills necessary for unemployment and the seekers' skill sets, and government programs that create incentives to remain unemployed. |
| creative destruction | A term coined by economist Joseph Schumpeter that refers to the ongoing process of technological innovation and industrial decline. |
| efficiency wages | A wage that exceeds the market wage. Efficiency wages encourage worker productivity but also play a role in creating unemployment. |
| cyclical unemployment | Unemployment associated with downturns in the business cycle. Most economists view cyclical unemployment as harmful and believe that government intervention is necessary to prevent it from occurring. |
| full employment | The level of employment that exists when the economy is being productively efficient. Full employment is associated with an economy at the natural rate of unemployment. |
| natural rate of unemployment | The rate of unemployment that exists when there is no cyclical unemployment present in the economy. The natural rate of unemployment is thought to be independent of the inflation rate. |
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