Menkiw Princples of Economic Chap 28 Summary

Micro Macro Economic

Chap. 28 Summary

“Unemployment”

Prepared by

Hengky Arviano (1441106)

UNIVESITAS INTERNASIONAL BATAM

BATAM

2015

Identifying Unemployment

How Is Unemployment Measured?

Measuring unemployment is the job of the Bureau of Labor Statistics (BLS), which is part of the Department of Labor. Every month, the BLS produces data on unemployment and on other aspects of the labor market, including types of employment, length of the average workweek, and the duration of unemployment. These data come from a regular survey of about 60,000 households, called the Current Population Survey.

Based on the answers to survey questions, the BLS places each adult (age 16 and older) of each surveyed household into one of three categories:

* Employed: This category includes those who worked as paid employees, worked in their own business, or worked as unpaid workers in a family member’s business. Both full-time and part-time workers are counted. This category also includes those who were not working but who had jobs from which they were temporarily absent because of, for example, vacation, illness, or bad weather.

* Unemployed: This category includes those who were not employed, were available for work, and had tried to find employment during the previous four weeks. It also includes those waiting to be recalled to a job from which they had been laid off.

* Not in the labor force: This category includes those who fit neither of the first two categories, such as a full-time student, homemaker, or retiree.

Once the BLS has placed all the individuals covered by the survey in a category, it computes various statistics to summarize the state of the labor market. The BLS defines the labor force as the sum of the employed and the unemployed:

* Labor force = Number of employed + Number of unemployed.

The BLS defines the unemployment rate as the percentage of the labor force that is unemployed:

* Unemployment rate : Number of...