Post on 11-Jan-2016
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التضخم و البطالة Unemployment and Inflation
لخامسالجزء ا
الرحماني. إقبال د2001
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Unemployment
Boom
Recovery
Depression
Recession
Real GDP growth
Time
Recall that unemployment is
an economic and social
phenomenon that occurs and
increases mainly during
periods of recessions and
depressions of the business
cycle.
Q: What causes the fluctuations in the business cycle?
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Types of unemployment:
1- Seasonal unemployment: A product of regular andrecurring changes in hiring of certain fields on aseasonal basis . ( بطالة موسمية)
2- Frictional unemployment: A product of the short-term movement of workers between jobs & of first time job seekers. (بطالة إحتكاكية)
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3-Structural unemployment: A product of technological changes and other changes in the structure of the economy. ( بطالة هيكلية)
4- Cyclical unemployment: A product of the down side of the business cycle. (بطالة دورية)
Q-1: What is disguised unemployment, behavioral unemployment, and imported unemployment?
Q-2: What are the main types of unemployment exit in the Kuwait?
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Note: Full-employment in economics does not mean zero unemployment. That is why some economist use the termNatural rate of unemployment.
Natural rate of unemployment: the unemployment rate that would exist when cyclical unemployment = zero
Note: Frictional unemployment is short term; while structural unemployment can be long term.
Q: Who is more likely be unemployed among the differenteducational levels, age groups, sex and race?
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Q: What are the costs of unemployment?
1- lower standards of living and status (social unrest).
2- Lower GDP.GDP Gap = Potential GDP - Actual GDP
Okun’s Law: For each 1% which the actual unemployment
exceeds the natural rate of unemployment, a GDP gap of 2% occurs.
Q: What is the effect of increasing unemployment on the government budget ?
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Lines of unemployed Americans waiting to receive subsidies (unemployment benefit) during the time of the Great depression.
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Unemployment rate = number of unemployed X 100
number of the labor force
Measure of Unemployment:
Q-1: Who are the unemployed ?
A: those who are actively seeking work and can not find any jobat the average wage.
Note : unemployment rate does not include discouraged workers.
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Note: Total population :
Population under
age 16
House care takers + students
+ retired + disabled
Employed Unemployed
Q-2: What is meant by the labor force (قوة العمل)?
A: The labor force includes those who are working and those who are unemployed and seeking employment
Labor force
Total population
Outside the Labor force
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Example: according to 1998 statistics of Kuwait, calculate the unemployment rate
Outside the labor
force
435695
Employed +unemployed
206190
Unemployed
2209
Unemployment rate = 2209 X 100 = 1.1%
206190
then
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معدل البطالة في الكويت مازال يعد منخفضا ولكن مالحظة:المشكلة األساسية تتعلق بإختالالت في قوة العمل وسوق العمل
وفي التركيبة السكانية.
Young Population المجتمع السكاني الكويتى فتي % من مجمل السكان( . 42 سنة يمثلون حوالي 15السكان > (
مما Fertility rate باإلضافة الى ارتفاع معدل الخصوبة.Dependency Ratio يؤدي الى ارتفاع معدل اإلعالة
Note: Dependency ratio = population < 15 years + population > 60(5)
Population at age 15 - 60 (5)
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اختالل سوق العمل في الكويت
نسبة الكويتيين الى اجمالى قوة العمل نسبة الكويتيين الى اجمالى قوة العمل
العمل قوةالكويتية18.85
العمل قوةالوافدة
81.15
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خدمات إنتاجية
5.62
تجارة1.30
وشخصية اجتماعية 85.40خدمات
أنشطة سلعية
7.67
حسب النشاط االقتصادىحسب النشاط االقتصادىحسب النشاط االقتصادىحسب النشاط االقتصادى
اختالل سوق العمل )قوة العمل الكويتية(
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اختالل سوق العمل )قوة العمل الكويتية(
حسب قطاع العملحسب قطاع العملحسب قطاع العملحسب قطاع العمل
ومشترك خاص6.80
93.20حكومي
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التوزيع المهنىالتوزيع المهنىالتوزيع المهنىالتوزيع المهنى
اختالل سوق العمل )قوة العمل الكويتية(
وفنية علمية8.44
مدرسون13.48
مديرون 20.41ومشرفون
أخرى
24.60
كتبة33.08
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ية العملالكويت المستوىالتعليميلقوة)2000(
ا علي ت مؤهال
وسطة ت مؤهالتم
ا ي دن مؤهالت
دونمؤهل ب
22.9%
33.7%38.4%
5%
% من 15.2مالحظة: نسبة حملة المؤهالت العليا من الذكور= % من مجمل اإلناث36.9مجمل الذكور بقوة العمل ، و اإلناث
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Inflation
Recall that keeping a stable general price level is one of themain macroeconomic goals.
Inflation is a sustained rise in the average level of prices (general price level).
The price level is the average level of all prices in the economy.
Note: inflation is generally classified into two types: Hyper inflation & creeping inflation
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Measure of inflation:
Recall that the price index(PI) is a measure of changes in the average price level. Q|: How is the price index measured ?
PI for a certain year - PI for a comparative year X 100
PI for a comparative year
Inflation rate =
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Year Price index
1995
1997
1996
2000
100
110
120
123
Example :
Calculate inflation rate between (1995-97) and (1997-2000)
1) Inflation rate (1995-97)
= (120 - 100) X 100 = 20 %
100
2) Inflation rate (1997-2000)
= (123 - 120) X 100 = 2.5 %
120
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Real historical example, Germany 1914-1924:
Year
1914
1920
1918
1922
100
204
1260
3670
Price index
1923
1924
278500
117,320,000,000,000
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Effects of inflation:
1- Impact on income: if nominal income does not increase, it means a lower purchasing power. Hence, real income will be lower.
2- Impact on income distribution: redistribution of income from fixed income groups to unfixed income groups.
Note 2: purchasing power = real value of one unit of money ( $1) = ( $1 / price index) X 100
Note 1: Recall, Real income = (nominal income / PI) X 100
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Effects of inflation:
3- Impact on creditors & debtors: if inflation rate is higher than nominal interest rate; then there will be a redistribution of income from creditors to debtors.
4- Impact on balance of trade: if inflation rate in the economy is higher than rates in other countries; this will increase imports and reduce exports, leading to a deficit in the balance of trade.
Note : Real interest rate = nominal interest rate - inflation rate
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Types of inflation: (according to the source of inflationary pressure)
1- Demand-pull inflation: inflation caused by increasing aggregate demand for output. “Too manydollars chasing too few goods”. More likely to occur when the economy is operating near its potential output.
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Q
P
AS(SR)
AD
Ye Y
f
AS (LR)
Recall!When the economy is operating near full employment,any increase in AD will lead only to an increase in prices.
p1
p2
p3
AD2
AD3
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Types of inflation:
2- Cost-push inflation: inflation caused by rising costsof production. “profit -push” vs. “wages- push”!. Could occur at different levels of output.
Q-1: What is meant by imported inflation?
Q-2: What is meant by stagflation?
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Phillips Curve
In 1958, A.W. Phillips , a New Zealand economist, found that thereis an inverse relationship between the unemployment rate and the rate of change in wages in England during the period 1826 to 1957.
Later early studies confirmed aninverse relationship between unemployment and inflation rate. This relation became known asPhillips Curve.
Unemployment rate
Inflation rate(wage rate)
F1
F2
U2U1
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Q: Is there a trade off between unemployment and inflation rate?
Unemployment rate
Inflation rate
Most economists believe that the inverse relationship between inflationand unemployment rate is just a short-term phenomena.
LR Phillips Curve
SR1SR2
SR3