Economics Unit 6, Lesson 3©2012, TESCCC

Objectives

• Define unemployment

• Describe the different types of unemployment

• Describe how full employment is measured

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Unemployment

• The number of people (over 16) who do not have jobs but are actively seeking a job.

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What are the problems with unemployment figures?

1. hidden unemployment or discouraged worker.

This is the worker who is no longer looking for a

job so he would not be included with the

unemployment number. This worker is still a

problem for the economy. We are not using

this labor resource efficiently.

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Problems with the unemployment figures

2. under employment- worker’s skills do not

match jobs. The worker is overqualified for a

job or working at a job below their skills. This

could be a person with a master’s degree in

English who is working as a waiter. Again, we

are not using this labor resource efficiently.

Causes unemployment numbers to be understated

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Four Types of Unemployment

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1. Frictional - “between jobs” considered normal, a worker leaves a job to look for a better one. Work your way through college as a waiter and quit to look for better job with your degrees

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Types of Unemployment

2. Seasonal - weather change or annual patterns, change of seasons or weather, cause job loss.

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3. Structural -change in how economy operates; an entire industry fails; people no longer demand or want that product. The worker’s skills do not match the jobs that are available

– workers need new training to enter different industry

– There are four major causes of structural unemployment

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Four Causes of Structural Unemployment1. New technology – new innovations and ideas sometimes

make the old ones obsolete.

2. Change in consumer demand – tastes change and

consumers may stop purchasing old items

3. Globalization – jobs may be relocated to another country

4. Lack of education – some people do not have the minimum

education or training for the jobs available today.

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4. Cyclical - jobs are lost in correlation with the business cycle (recession - lose job). This is the worst type of unemployment for the economy and the one we worry about.

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Economic Impact of unemployment is that our standard of living goes down and the economy faces an economic slowdown.

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Full employment

• An unemployment rate below 6% is considered full employment

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