UNIT TWO(4): UNEMPLOYMENT

• Unemployment: failure to use unavailable resources, particularly labor to produce desired goods and services.
• population- total amount of people in a country.
• labor force- number of people in a country that is employed or unemployed.
• FORMULA: (unemployment rate/ unemployment rate + employment rate) X 100
• EMPLOYED: 
• People who are 16 yrs of age and up with a job (full/part time)
• 1 hr every two weeks = employed
• UNEMPLOYED: 
• People who are 16 yrs and up that don't have a job but are actively searching for a job within the last two weeks.
• NOT IN LABOR FORCE: 
• Have kids
• full time student
• retirees
• disabled people
• homeworkers
• mentally institutionalized
• incarcerated 
• military
• discouraged workers (people who look for a job, don't get it and stop trying)

TYPES OF UNEMPLOYMENT

1. FRICTIONAL: Temporarily unavailable or "in between jobs." Workers are qualified and have transferable skills who are looking for a better opportunity. (ex.  HS or college graduate) 
2. SEASONAL: Due to the time of the year and the nature of the job. (ex. life guard, mall Santa clause, Easter bunny, school bus driver, tourism, construction workers)
3. STRUCTURAL: Changes in the structure of the labor force which makes some skills obsolete. Workers don't have transferable skills. (ex. VCR repair man, creative destruction- when a new job is created the old job gets destroyed)
4. CYCLICAL: Unemployment that results in economic downturns such as recession. As demands for goods and services fall, demand for labor workers fall and workers will be laid off. 

• Full employment or NRU (natural rate of unemployment)
  [ FULL EMPLOYMENT MEANING THERE IS NO CYCLICAL UNEMPLOYMENT]
• Okun's Law: For every 1% in which the actual unemployment rate exceeds the rate of unemployment, it causes a 2% decrease in real GDP.
• Rule of 70: Calculates the number of years that is required to double GDP.
  ex. if the annual inflation rate is 2%, how long will it that for the GDP to double?
  
  70/2 =35 years, therefore it will take 35 years to double.