Employment and Unemployment Essentials Free Online FlashCards

What is the labor force?

The labor force equals employed people plus unemployed people who meet the availability and job-search criteria.

Who is classified as unemployed?

A person is unemployed if they have no job, are available to work, and are actively seeking work or waiting to be recalled.

How is the unemployment rate calculated?

The unemployment rate is unemployed people divided by the labor force, multiplied by 100. People outside the labor force are not in its denominator.

Calculate the rate: 150 million employed, 10 million unemployed.

The unemployment rate is 6.25%: 10 million unemployed divided by 160 million in the labor force, multiplied by 100.

What does the labor-force participation rate measure?

The labor-force participation rate is the labor force divided by the civilian noninstitutional population, multiplied by 100.

Why can both unemployment and participation rates fall?

If unemployed workers stop searching, they leave the labor force. The unemployment rate may fall while the labor-force participation rate also falls.

What is the employment-population ratio?

The employment-population ratio is employed people divided by the civilian noninstitutional population, multiplied by 100. It is not affected by whether people outside the labor force search for work.

Why is the official U-3 rate incomplete?

U-3 excludes people who want work but have not searched recently and does not fully capture involuntary part-time work. U-6 includes both groups more broadly.

What causes frictional unemployment?

Frictional unemployment is short-term unemployment caused by workers searching for suitable jobs, such as a recent graduate seeking a first position.

What causes structural unemployment?

Structural unemployment occurs when workers’ skills, locations, or qualifications do not match available jobs, often after automation or an industry decline.

Why does cyclical unemployment rise in recessions?

Cyclical unemployment results from recessions: falling aggregate demand and production lead firms to reduce output and lay off workers.

What is seasonal unemployment?

Seasonal unemployment occurs when demand for labor varies predictably during the year, as in some agriculture, tourism, construction, and holiday-retail jobs.