Today’s conversation was about unemployment. Unemployment occurs when a person is able to work and is searching for work but is currently not working.
Unemployment is best equated by
- unemployed workers are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work
-labor force is the total number of people employed or seeking employment in an area
-it is surveyed every month
There are 6 types of unemployment.
1) Frictional Unemployment
- occurs when a worker moves from one job to another.
2) Classical Unemployment
- also known as real-wage unemployment
- occurs when real wages for a job are set above the market-clearing level
3) Cyclical or Keynesian Unemployment
- also known as demand deficient unemployment
- occurs when there is not enough aggregated demand in the economy
-caused by business recycle recession, and wages not falling to meet the equilibrium level
4) Structural Unemployment
- caused by a mismatch between jobs offered by employers and potential workers
- may be affected by geographical location, skills, and other factors
5) Seasonal Unemployment
- occurs when an occupation is not in demand at certain seasons
6) Long-term Unemployment
- an unemployment lasting longer than one year
Okun’s Law
-Okun's law states that for every 3% GDP falls relative to potential GDP, unemployment rises 1% (of the total workforce).
-When the economy operates at productive capacity, it will experience the natural rate of unemployment.
Works Cited
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