OVERVIEW: WEEK OF OCTOBER 7th
Topic
This week, you begin a review of unemployment. You will be introduced to terms such as the labor force, official unemployment rate, frictional, structural and cyclical unemployment, full employment and many more.
Unemployment occurs due to downturns in the economy that sees GDP levels fall and employers laying off workers. Your first task should be to understand the composition of the labor force. It is the sum of the employed and unemployed. However, not all unemployed individuals are the same. What is important to keep in mind is that some unemployed individuals are actively seeking work which means they are counted in the labor force, while other unemployed individuals are no longer seeking work and therefore are classified as, discouraged workers.
It is interesting to note that the severity of recessions (periods of GDP downturns accompanied by unemployment), can be measured by the ranks of discouraged workers. The more severe the downturns, the deeper the ranks of discouraged workers. Mild downturns in the economy (which are common as part of the business cycle) don't cause severe unemployment and therefore don't create too many discouraged workers.
Make sure to distinguish between full employment and the natural rate of unemployment. In a nutshell, you should know that 0% unemployment is not possible nor desirable. Economies such as the United States' will always have some level of unemployment. When unemployment does NOT include any cyclical unemployment, we refer to it as the natural rate of unemployment or full employment. In the United States, that percentage is currently around 4%-5%. So here's some food for thought: research the official unemployment rate in the U.S. and compare it to the natural rate of unemployment. What does it say about the current U.S. economy?
Objectives
By the end of this week, you will be able to:
- Determine the labor force.
- Distinguish between frictional, structural and cyclical unemployment.
- Calculate the labor force participation rate and the official unemployment rate.
- Identify the natural rate of unemployment and full employment
- Discuss the importance of discouraged workers
Weekly Schedule
| Due date | Activity |
|---|---|
|
Read Textbook through Chapter 8 |
|
| Refer to Schedule | Assignment: Relevant Study Guide Questions |
| Sunday, 10/13 | Quiz #6 Due |