The document discusses different types and causes of unemployment. It describes how the unemployment rate is calculated monthly by the Bureau of Labor Statistics. There are always some frictional unemployed workers due to the time needed to search for suitable jobs. Additional unemployment is caused by minimum wage laws which reduce the quantity of jobs available. Unions can also contribute to unemployment by negotiating above-market wages for their members. Some firms choose efficiency wages above market rates to improve worker productivity and retention.

1. 28 Unemployment and Its Natural Rate

13. Figure 1 The Breakdown of the Population in 2001 Copyright©2003 Southwestern/Thomson Learning Adult Population (211.9 million) Labor Force (141.8 million) Employed (135.1 million) Not in labor force (70.1 million) Unemployed (6.7 million)

16. Table 1 The Labor-Market Experiences of Various Demographic Groups Copyright©2004 South-Western

17. Figure 2 Unemployment Rate Since 1960 Copyright©2003 Southwestern/Thomson Learning 10 8 6 4 2 0 1970 1975 1960 1965 1980 1985 1990 2005 Percent of Labor Force 1995 2000 Natural rate of unemployment Unemployment rate

18. Figure 3 Labor Force Participation Rates for Men and Women Since 1950 Copyright©2003 Southwestern/Thomson Learning 100 80 60 40 20 0 1950 1955 1960 1965 1970 1975 1980 1985 1990 2000 Labor-Force Participation Rate (in percent) Women Men 1995

35. Figure 4 Unemployment from a Wage Above the Equilibrium Level Copyright©2003 Southwestern/Thomson Learning Quantity of Labor 0 Wage Surplus of labor = Unemployment Labor supply Labor demand Minimum wage L D L S W E L E