Measures of Unemployment

10 Key excerpts on "Measures of Unemployment"

• 

  eBook - PDF

  Fundamentals of Labor Economics

  • Thomas Hyclak, Geraint Johnes, Robert Thornton, , Thomas Hyclak, Thomas Hyclak, Geraint Johnes, Robert Thornton(Authors)
  • 2020(Publication Date)
  • Cengage Learning EMEA

    (Publisher)

  Measures of Unemployment The two most widely used measures of the extent of unemployment in a given labor market are the unemployment rate and the duration of unemployment. The unemployment rate measures the incidence of unemployment at any point in time and provides an indicator of the average individual’s risk of experiencing a spell of unemployment. Duration measures the severity of unemployment. A spell of unemployment may be fairly easy to deal with if the individual finds a new job within a couple of weeks, while a spell of unemployment lasting several months is likely to have a more severe impact on the economic and psychological well-being of the individual. The Unemployment Rate In all countries, government agencies devote considerable resources to the collection of statistical data that enable them to calculate the unemployment rate. But what does the unemployment rate measure, and how is it calculated? The starting point is an estimate of the civilian working-age population. This usually excludes military personnel and those institutionalized in hospitals and prisons of vari- ous types because these persons are not available for work in the private labor market. The working-age population also excludes young children, with the minimum age used to define “working age” varying by country. In the United States, those younger than age 16 are excluded from the working-age population. Copyright 2021 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s). Editorial review has deemed that any suppressed content does not materially affect the overall learning experience. Cengage Learning reserves the right to remove additional content at any time if subsequent rights restrictions require it.

  Sign up to read

  Learn more about book
• 

  Available until 5 Dec |Learn more

  Modern Labor Economics

  Theory and Public Policy - International Student Edition

  • Ronald G. Ehrenberg, Robert S. Smith, Kevin F. Hallock(Authors)
  • 2021(Publication Date)
  • Taylor & Francis

    (Publisher)

  CHAPTER 14 Unemployment

  With the dramatic rise in unemployment in the Great Recession of 2007–2009 and then with the spike during the COVID-19 crisis has come a renewed interest in understanding both the measurement and—more importantly—the causes of unemployment. As noted in Chapter 2 , the population can be divided into those people who are in the labor force (L) and those who are not (N). The labor force consists of people who are employed (E) and those who are unemployed but would like to be employed (U). The concept of unemployment is somewhat ambiguous because, in theory, almost anyone would be willing to be employed in return for a generous-enough compensation package. Economists tend to resolve this dilemma by defining unemployment in terms of an individual’s willingness to be employed at some prevailing market wage. Government statistics take a more pragmatic approach, defining unemployed people as those who are on temporary layoff waiting to be recalled by their previous employer, or those without a job who have actively searched for work in the previous month (of course, “actively” is not precisely defined1 ).

  Given these definitions, the unemployment rate (u) is measured as the ratio of the number of unemployed people to the number people in the labor force:

  u =

  U L

  (14.1)

  Much attention focuses on how the national unemployment rate varies over time and how unemployment rates vary across geographic areas and age/race/gender/ethnic groups.

  However, unemployment rate data have limitations. They do reflect the proportion of a group that, at a point in time, actively want to work but are not employed. For a number of reasons, however, they do not necessarily provide an accurate reflection of the economic hardship that members of a group experience. First, individuals who are not actively searching for work, including those who searched unsuccessfully and then gave up, are not counted among unemployed people (see Chapter 7 ).2

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Labor and the Economy

  • Howard M. Wachtel(Author)
  • 2013(Publication Date)
  • Academic Press

    (Publisher)

  The labor force is constantly chang-ing, while the measured unemployment rate is a static snapshot. Most unem-ployment is the result of a few individuals experiencing multiple spells of un-employment. A firm basis of understanding of these issues of measurement will aid comprehension of the later policy chapters. Study Questions 1 How does the Bureau of Labor Statistics (BLS) define and measure un-employment? What are some of the shortcomings of its approach? 2 What are the trends in the age-sex composition of the labor force, and how have they affected the overall measured unemployment rate? 3 How does the BLS measure of unemployment underestimate the true unemployment rate? How does it overstate the true unemployment rate? 4 How do you explain the paradox of both an increasing rate of employment and an increasing rate of unemployment? 5 Compare the static nature of the measured unemployment rate with the dynamic process of labor market flows. Further Reading STATISTICAL PUBLICATIONS U.S. Department of Labor. Employment and Training Report of the President. Wash-ington: Government Printing Office, annual. U.S. Department of Labor. Handbook of Labor Statistics. Washington: Government Printing Office, annual. GENERAL READING Clark, Kim B., and Lawrence H. Summers. Labor Market Dynamics and Un-employment: A Reconsideration. Brookings Papers on Economic Activity 1 (1979), pp. 13-60. National Commission on Employment and Unemployment Statistics. Counting the Labor Force. Washington: Government Printing Office, 1979. Unemployment: Causes and Policy Responses The concern of economists with the causes of unemployment is a fairly recent phenomenon. The Great Depression of the 1930s fastened the attention of the economics profession on the problems of unemployment—its causes and con-sequences.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Principles of Macroeconomics for AP® Courses 2e

  • Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
  • 2017(Publication Date)
  • Openstax

    (Publisher)

  Second, the decline in the unemployment rate was quite slow, with the pre-recession unemployment rate only reaching a higher level than six years after the recession ended. This reflects a combination of slow increase in the number of jobs and ongoing increases in the size of the population and the labor force. It turns out that recent recessions, going back to the early 1990s, have been characterized by longer periods of recovery than their predecessors. We will return to this point at the end of the chapter. However, first we Chapter 7 | Unemployment 163 need to examine unemployment. What constitutes it, and how do we measure it? Introduction to Unemployment In this chapter, you will learn about: • How Economists Define and Compute Unemployment Rate • Patterns of Unemployment • What Causes Changes in Unemployment over the Short Run • What Causes Changes in Unemployment over the Long Run Unemployment can be a terrible and wrenching life experience—like a serious automobile accident or a messy divorce—whose consequences only someone who has gone through it can fully understand. For unemployed individuals and their families, there is the day-to-day financial stress of not knowing from where the next paycheck is coming. There are painful adjustments, like watching your savings account dwindle, selling a car and buying a cheaper one, or moving to a less expensive place to live. Even when the unemployed person finds a new job, it may pay less than the previous one. For many people, their job is an important part of their self worth. When unemployment separates people from the workforce, it can affect family relationships as well as mental and physical health. The human costs of unemployment alone would justify making a low level of unemployment an important public policy priority. However, unemployment also includes economic costs to the broader society. When millions of unemployed but willing workers cannot find jobs, economic resource are unused.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Principles of Macroeconomics 2e

  • Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
  • 2017(Publication Date)
  • Openstax

    (Publisher)

  Second, the decline in the unemployment rate was quite slow, with the pre-recession unemployment rate only reaching a higher level than six years after the recession ended. This reflects a combination of slow increase in the number of jobs and ongoing increases in the size of the population and the labor force. It turns out that recent recessions, going back to the early 1990s, have been characterized by longer periods of recovery than their predecessors. We will return to this point at the end of the chapter. However, first we Chapter 8 | Unemployment 189 need to examine unemployment. What constitutes it, and how do we measure it? Introduction to Unemployment In this chapter, you will learn about: • How Economists Define and Compute Unemployment Rate • Patterns of Unemployment • What Causes Changes in Unemployment over the Short Run • What Causes Changes in Unemployment over the Long Run Unemployment can be a terrible and wrenching life experience—like a serious automobile accident or a messy divorce—whose consequences only someone who has gone through it can fully understand. For unemployed individuals and their families, there is the day-to-day financial stress of not knowing from where the next paycheck is coming. There are painful adjustments, like watching your savings account dwindle, selling a car and buying a cheaper one, or moving to a less expensive place to live. Even when the unemployed person finds a new job, it may pay less than the previous one. For many people, their job is an important part of their self worth. When unemployment separates people from the workforce, it can affect family relationships as well as mental and physical health. The human costs of unemployment alone would justify making a low level of unemployment an important public policy priority. However, unemployment also includes economic costs to the broader society. When millions of unemployed but willing workers cannot find jobs, economic resource are unused.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Principles of Economics 2e

  • Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
  • 2017(Publication Date)
  • Openstax

    (Publisher)

  Second, the decline in the unemployment rate was quite slow, with the pre-recession unemployment rate only reaching a higher level than six years after the recession ended. This reflects a combination of slow increase in the number of jobs and ongoing increases in the size of the population and the labor force. It turns out that recent recessions, going back to the early 1990s, have been characterized by longer periods of recovery than their predecessors. We will return to this point at the end of the chapter. However, first we Chapter 21 | Unemployment 499 need to examine unemployment. What constitutes it, and how do we measure it? Introduction to Unemployment In this chapter, you will learn about: • How Economists Define and Compute Unemployment Rate • Patterns of Unemployment • What Causes Changes in Unemployment over the Short Run • What Causes Changes in Unemployment over the Long Run Unemployment can be a terrible and wrenching life experience—like a serious automobile accident or a messy divorce—whose consequences only someone who has gone through it can fully understand. For unemployed individuals and their families, there is the day-to-day financial stress of not knowing from where the next paycheck is coming. There are painful adjustments, like watching your savings account dwindle, selling a car and buying a cheaper one, or moving to a less expensive place to live. Even when the unemployed person finds a new job, it may pay less than the previous one. For many people, their job is an important part of their self worth. When unemployment separates people from the workforce, it can affect family relationships as well as mental and physical health. The human costs of unemployment alone would justify making a low level of unemployment an important public policy priority. However, unemployment also includes economic costs to the broader society. When millions of unemployed but willing workers cannot find jobs, economic resource are unused.

  Sign up to read

  Learn more about book
• 

  eBook - PDF

  Labour Market Planning Revisited

  • M. Hopkins(Author)
  • 2002(Publication Date)
  • Palgrave Macmillan

    (Publisher)

  56 3 The Measurement and Monitoring of Mismatches (Employment and Unemployment) 3.1 Introduction Data availability for manpower or human resource planning at the national level are poor in developing countries. Further, there is much confusion over the meaning of employment and unemployment – and this is not confined to the developing countries with frequent changes of concepts and terminology occurring in the developed countries mainly to suit the interests of one political party or another. In this chapter, therefore, the question of ‘what are we trying to measure?’ is examined, and then the main accepted international definitions are presented and discussed. In the developing countries mismatch between what is available and what is not often leads to a large informal sector and, therefore, recent ILO work in defining the informal sector is presented and discussed. International comparisons of unemployment give an incomplete indi- cation of how well labour markets function from country to country. Conceptual difficulties abound, and the lesser developed a country is, the poorer is its labour statistical base. For instance, the OECD publishes unemployment figures as supplied to it by its member governments but these are not directly comparable across nations. Buried in the back of OECD Employment Outlook reports, however, is a presentation of standard- ized rates for comparability among members for some of its member states. EUROSTAT has access to its member countries’ labour surveys in their raw form and publishes internationally comparable statistics that uses the ILO international definition of unemployment. Table 3.1, for instance, shows the difference between OECD and EUROSTAT estimates for 1992. There the variations in estimates vary significantly for some M. Hopkins, Labour Market Planning Revisited © Michael Hopkins 2002

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Tracking America's Economy

  • Norman Frumkin(Author)
  • 2015(Publication Date)
  • Routledge

    (Publisher)

  9

  Unemployment

  Jobs directly affect the material well-being of workers and their families. To workers out of work, unemployment is not an abstract idea in a theoretical discussion. Thus, voters experiencing unemployment are more likely to vote for politicians who offer different perceptions of how the economy works with the promise of job creation, as noted by Alberto Alesina and Nouriel Roubini.1

  Unemployment also affects people and the economy in intangible ways, such as its influence on personal satisfaction and social stability. Though personal satisfaction and social stability are not strictly “economic,” they can affect economic developments (see chapter 14 , “Noneconomic Intangibles”).

  This chapter covers the official Measures of Unemployment based on household surveys of the civilian noninstitutional population sixteen years and older, the role of unemployment insurance, matching unemployed workers with job openings, cyclical movements of the labor force, and unemployment goals.

  UNEMPLOYMENT DATA

  Unemployment data are prepared monthly by the Bureau of Labor Statistics (BLS) in the U.S. Department of Labor based on data obtained from a survey of a sample of households. The data series are published in the BLS monthly journals, Employment and Earnings and the Monthly Labor Review (www.bis.gov).

  The unemployment rate (UR) is defined as the percentage of the nation’s civilian noninstitutional labor force sixteen years and older that is out of work, actively looking for a job, and available for work. It is a relative measure of the degree of slack in job markets. At the most simple level, a relatively high UR indicates that production probably can be increased without generating inflation, because the available labor supply will tend to moderate wage rate increases and in some cases reduce wage rates. Conversely, in periods of low unemployment, high economic growth is more likely to raise wages—the tighter labor supply pushes up wages as more experienced and more productive workers are bid away from firm to firm on all steps of the skill ladder, which increases job openings for the less experienced and less productive workers. But the economy has not always conformed to this model (see chapter 2

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  Introducing a New Economics

  Pluralist, Sustainable and Progressive

  • Jack Reardon, Maria Alejandra Caporale Madi, Molly Scott Cato(Authors)
  • 2017(Publication Date)
  • Pluto Press

    (Publisher)

  The unemployment rate is the most visible and perhaps best-known barometer of the labour market. It generally increases during recessions and decreases during expansions; thus, typically, the longer the expansion, the lower the unemployment rate. The current global conceptual framework for measuring the labour force was officially adopted by the 13th International Conference of Labour Statisticians in 1982. Whether a person is categorised as unemployed is determined by a survey questionnaire asking about his or her activities during a specific reference point, e.g. a specific week during the previous month. The following are some commonly used definitions:

  •   Working-age population, or economically active population: the total number of people aged 16 years and over.

  •   Labour force: the number of people employed, plus the number unemployed from the working-age population, over the age of 16.

  •   Labour force participation rate: the percentage of the working-age population who are members of the labour force; to obtain the rate, the latter is divided by the former.

  •   Unemployed population: all persons who, during a specified week, had no job and were available for work and had made efforts to find employment.

  •   Unemployment rate: the percentage of people in the labour force who are unemployed. It is calculated by dividing the number of unemployed by the number of people in the labour force, then multiplying by 100. Question: If workers give up their search for work, what happens to the unemployment rate?

  •   Vulnerable employment:

  Sign up to read

  Learn more about book
• 

  eBook - ePub

  The Problem of the Unemployed (Routledge Revivals)

  An Enquiry and an Economic Policy

  • J. Hobson(Author)
  • 2013(Publication Date)
  • Taylor & Francis

    (Publisher)

  CHAPTER II

  THE MEASURE OF UNEMPLOYMENT

  § 1. Defective General Statistics.

  EXACT statistical measurement of “the unemployed”, or even a close estimate of the total number of those “out of work” at any given time is impossible at present. The miserably defective character of our statistical machinery forms an adequate basis of ignorance upon which to form discreet official answers to awkward questions. But though we cannot directly measure the magnitude of the evil, we are able to show that it is very great.

  The only official figure relating to the general quantity of “unemployment” is that percentage calculated by the Board of Trade from the returns furnished to it by trade union officials. The official figure represents the average percentage of members of certain unions who are reported at a given date to be in receipt of unemployed benefit from the union funds. In the December number 1894 of the Labour Gazette the figure obtained by averaging the results of sixty-two trade union returns was 7 per cent. But this figure cannot be taken as a general measure of “unemployment.” It is not designed as such by the Labour Department, but is merely quoted as a serviceable index to the general condition of trade and employment in some of our staple manufactures. The Board of Trade exercises no power to compel all trade societies to make returns of “unemployed”; many unions have no record of “unemployed”, many that have a record make no return, and many of the returns are too indefinite for use.

  §2. A Trade Union Average.

  But though we cannot take the 7 per cent, average of sixty-two trade unions and apply it generally to the working classes in order to estimate the total of unemployed, we may use it as a serviceable starting-point for legitimate conjecture. In particular, I propose to bring evidence to show how far it is likely that the average of those who are involuntarily “unemployed” is greater or smaller than 7 per cent.

  Sign up to read

  Learn more about book