UNEMPLOYMENT

-the failure to use availiable resources particularly labor to produce desired goods & services

In labor force

-above 16 Y.O.A

-able and willing to work

-employed + unemployed

Not found in labor force

-military

-students

-retired

-dissabled

-homemakers

-mental institution 

-in jail or prison

-those not looking for a job

Unemployment rate

-Ideal: 4-5%-full employment / natural rate of unemployment 

Calculate

# of unemployed / (# of employed + unemplyed) X 100

Four types of unemployment 

Frictional

-those who are searching for a job

-temporary unemployed/ in between jobs

-have transferable skills

-college and highschool graduates

-possibly layed off from previous job

Structual

-changes in the structure in the labor force that make some skills obsolete these workers do not have transferable skills

-learn new skills in order to get a job

Seasonal

-due to the time of year and the nature of  the job

-school bus drivers

-life guards

-santa clause/ easter bunny impersonators

-construction workers

Cyclical

-results from economic downturns such as a recession as demand for goods and service falls, demand for labor falls, and workers are layed off

Frictional and structural unemployment = NrU

Full employment means there are no cyclical unemployment 

GDP GAP

-ammount by which actual GDP fall short against potentiol GDP

Okun law 

-for every one percent in which actual unemployment rate exceeds nru a gdp gap of about 2% occurs

Ex: in 2012 the unemployment rate in mexico was 7.4% the nru is 6% 

7.4 - 6 X 2

Actual unemployment - nru X 2

Rule of 70

-it is used to determine how many years it takes for a value to double given a particular annual growth rate

Ex: if you put 20,000 in the bank and it earns a yearly interest of 7%, how many years would it take for your income to double?

70 / annual interest rate