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Economics Chapter 14
Unemployment 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 |
| Employed | the condition of having a job |
| Labor Force | the number of employed plus unemployed people age sixteen and over |
| Unemployment Rate | the unemployment rate is equal to the number of unemployed persons divided by the number in the labor force |
| Marginally attached workers | these are the people 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 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 the the official unemployment rate understates the actual unemployment |
| 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 frictionally unemployed; 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 employment 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; as one industry is being born, another industry is dying; |
| 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 occuring |
| Full Employment | the level of employment that exists when the economy is beng productively efficient; full employment is associated with an economy at the natural rate of unemployment |
| Natural Rate of Employment | 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 |
| Efficiency Wages | a wage that exceeds the market wage; efficiency wages encourage worker productivity but also play a role in creating unemployment |
| U3 | the official unemployment rate published by BLS |
| U1 | the unemployment rate that only includes people unemployed fifteen weeks or longer, as published by BLS |
| U2 | the unemployment rate that only includes people who have lost a job as opposed to those who have quite or those who have entered or reentered the labor force, as 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 |
| Employment-to-population ratio | the number of employed people divided by the working age |
| Labor Force Participation Rate | the labor force divided by the working age population |
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