NEDARBAS (UNEMPLOYMENT)

• Define the term unemployment.

• Explain how the unemployment (employment) rate is calculated.

• Describe, using examples, the meaning of frictional, structural, seasonal and cyclical (demand-deficient) unemployment.

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Assessment Criteria

Group Work Assessment Criteria (3p) Helping others and listening to others.

Focusing on the task 1p Use of English language 2p. Presentation of Work Assessment Criteria

(6p)Organization and presentation + answers (correctly) 6p.

Questions:

Who are the unemployed? How to Calculate Unemployment Rate? How to Calculate Employment Rate?

Who are the unemployed?

Unemployment is people of working age (those in the labor force) actively seeking work at the current wage rate but cannot find one.

Who are the unemployed?

TIP:As defined by the International Labour Organization,

"unemployed workers" are those who are currently not working but are willing and able to work for pay, currently available to work, and have actively searched for work

Individuals who are actively seeking job placement must make the effort to: be in contact with an employer, have job interviews, contact job placement agencies, send out resumes, submit applications, respond to advertisements, or some other means of active job searching within the prior four weeks.

Calculating the Unemployment Rate, Employment Rate:

UNEMPLOYMENT RATE:

EMPLOYMENT RATE:

Study the employment data below and answer the questions that follow:

Switzerland Spain

Population aged 15-64 (total) 5175054 31141200

Unemployed persons (total) 153518 1821917

Labour force (total) 4264435 21950811 All numerical answers must be given exactly or correct to two decimal places. 1. Calculate Switzerland's unemployment rate (Ur). 2. Calculate Switzerland's employment rate (Er). 3. Calculate Spain's unemployment rate (Ur). 4. Calculate Spain's employment rate (Er). 5. What macroeconomic factors might explain the differences in the unemployment rates in Spain and

Switzerland?

Activity 1

The Unemployment Record US

Overview of the Two Major Types of Unemployment

Overview of the Two Major Types of Unemployment

1. Equilibrium Unemployment 2. Disequilibrium Unemployment

The natural rate of unemployment

- Frictional Unemployment - Structural Unemployment - Demand-Deficient or Cyclical Unemployment - Seasonal Unemployment

Frictional unemployment

Frictional unemployment is transitional unemployment due to people moving between jobs:

• For example, newly redundant workers or workers entering the labour market (such as university graduates) may take time to find appropriate jobs at wage rates they are prepared to accept.

Structural unemploymentStructural unemployment is long term

unemployment that occurs when there is a mismatch between the skills of unemployed workers and the jobs available or that exists as a result of rigidities in the labor market

. EX: Many of the unemployed from heavy manufacturing

industry (e.g. in coal, steel and heavy engineering) have found it difficult to gain re-employment without an investment in re-training. This problem is one of occupational immobility.

Seasonal unemploymentEX: Construction workers are laid off in the

winter.

This type of unemployment is expected and there is nothing the government can do about it.

Unemployment statistics though are often corrected ('seasonally adjusted') so that policymakers can determine true changes in unemployment, not those due to the changing seasons.

Demand deficient (or cyclical) unemployment

• Cyclical unemployment is involuntary unemployment due to a lack of aggregate demand for goods and services. This is also known as "demand deficient" unemployment and is associated with the transition of the economy through the business cycle.

• When there is an economic recession we expect to see a rising level of unemployment because of plant closures and worker lay-offs. This is due to a fall in demand leading to a contraction in output across many industries.

Activity 2

For each of the following situations, put the appropriate letter before the example.F if it is an example of frictional unemployment.C if it is an example of cyclical unemployment.St if it is an example of structural unemployment.S if it is an example of seasonal unemployment.1. A Wisconsin construction worker cannot find work in the winter.2. A steelworker is laid off because of a long recession.3. A computer programmer quits her job in Chicago to look for a new

job in San Diego.4. A store clerk loses her job because sales are slow during a

business slump.5. A high school dropout applies for several jobs but is told each time

that he is not qualified.6. An unemployed college senior is looking for her first job.

• Define the term unemployment.

• Explain how the unemployment (employment) rate is calculated.

• Describe, using examples, the meaning of frictional, structural, seasonal and cyclical (demand-deficient) unemployment.

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