Unemployment

Unemployment: Is the percentage of people who do not have a job but are part of the labor force.

Labor force: The number of people in a country that are classified as employed or unemployed.
Unemployment rate =                                       Number of unemployed

                                                   Number of unemployed + Number of Employed         X 100

Not in the labor force: 

• Kids 
• Retired people
• Military personal
• Mentally insane 
• Incarcerated
• Full time students
• Stay at home parents
• Discourage workers

Forms of Unemployment:

• Voluntary- Between jobs, new opportunities, new choices, new lifestyle, educational level.
• Seasonal- People wait for the right moment to conduct their trade. Ex: School Bus Driver, construction workers.
• Cyclical - Down turn in the business cycle, recession, down price.
• Structural- Associated with lack of skills, decline in industry, change in technology.

Full Employment when there is not cyclical unemployment present in the economy. Natural Rate of Unemployment (NRU) achieved when labor markets are in balanced 4-5%
NRU = Structural UNP + Frictional UNP

Unemployment is good, because its less pressure to raise wages, more workers available in future expansions.

Unemployment is bad because, there is not enough consumption (GDP). There is too much poverty, too much government is needed

Okun's law - For every 1% unemployed above NRU causes a 2% decline in real GDP