Objectives• Distinguish among 4 types of employment.• Discuss the unemployment rate and describe how it differs over time and across groups.• Explain who is eligible for unemployment benefits in the United States.
Unemployment• 59% of the the unemployed lost their previous job.• 7% quit their previous job.• 10% were entering the labor market for the first time.• 24% were reentering the market.Why are so many peopleunemployed when there are somany jobs available?
Frictional Unemployment• The time it takes for the right employee to find the right employer.• Does not last long.• Better match up between workers and jobs.• Good for the economy!
Structural Unemployment• Job seekers do not have the skills demanded.• More of a problem than frictional unemployment because the unemployed may need to use a new skill.
Seasonal unemployment• Caused by seasonal changes in labor demand.• Some choose seasonal jobs to fit their lifestyle.• Many know they will be unemployed in the off season.
Cyclical unemployment• the result of a decline in the need for laborers due to a recession.• Caused by the recession phase of the business cycle.• Increases during a recession and decrease during an expansion.
Full employment• There is no cyclical unemployment.• Does not mean 0 unemployment.• Low unemployment between 5%-6%• Frictional, seasonal, and structural unemployment still exist
Problems with estimates• Discouraged workers- those who have stopped looking for jobs.• Underemployment- those who work part-time jobs or jobs they are overqualified for.• Counting those not looking for work as unemployed.• Count people working in the underground economy as unemployed.
Unemployment Rate• Most widely reported measure of nation’s economic health.• Noninstitutional adult population- all people 16 years or older except people on the military, prison, or psychiatric hospital.• Unemployment rate- the number of people without jobs who are looking for work divided by the number in the labor force. April 2011
Unemployment benefits• Unemployment benefits- Cash transfers to unemployed workers who lost their jobs, actively seek work, and meet other qualifications.• Can receive up to 6 months.• Unemployment benefits extended during a recession.
Think• What are the risks of providing unemployment benefits for people who have lost their jobs? What are the benefits?
AssignmentTask: Imagine you are in control of who receivesunemployment benefits in the country. What threerequirements would you make for people to be eligible?Fully explain your requirements (3 sentences each).Provide an example of a person who you think shouldreceive benefits. Provide an example of a person whoyou think should not be provided benefits. (One juicyhamburger with both examples in it.)