Chapter 27 - Unemployment and the demand for labor. In this chapter you will learn: How economists measure employment and unemployment? How minimum wage rates and unionization can cause unemployment? Why there is a natural rate of unemployment? Why there is a cyclical component of unemployment? | Chapter 27 Unemployment and the Demand for Labor © 2014 by McGraw-Hill Education 1 What will you learn in this chapter? • How economists measure employment and unemployment. • How minimum wage rates and unionization can cause unemployment. • Why there is a natural rate of unemployment. • Why there is a cyclical component of unemployment. • What factors may stop wages from falling to the equilibrium level. • What challenges are associated with unemployment insurance. © 2014 by McGraw-Hill Education 2 Defining and Measuring Unemployment • Unemployment is a situation where someone wants to work but cannot find a job in the current market. – People who do not have jobs and are not interested in obtaining one are not counted as unemployed. • The Bureau of Labor Statistics (BLS) defines unemployment as people who: 1. Didn’t work at all in the previous week. 2. Were available to work if they had been offered a job. 3. Were making efforts to look for a job. © 2014 by McGraw-Hill Education 3 1 Measuring unemployment • The labor force refers to the people who are in the working-age population and are either employed or unemployed. – The working-age population is the civilian, noninstitutional population over 16 years old. • The unemployment rate is the number of employed people divided by the number of people in the labor force: Unemployment rate = where Number of unemployed × 100 Labor force Labor force = Number of Employed and Unemployed © 2014 by McGraw-Hill Education 4 Active Learning: Categorizing employment Categorize each of the following individuals as employed, unemployed, or not in the labor force. 1. 2. 3. 4. 5. 6. 7. 8. 9. A student who also works 15 hours per week. A full-time student. A stay-at-home dad that does not work elsewhere. An individual that was laid off a year ago and is waiting until things get better to look for a job. A 15-year-old working full-time in the summer. A CPA working full-time at a financial firm. A military officer .
