Economics



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MACRO 7 Macroeconomic Measures-Unemployment and Inflation

Macroeconomics

Module 7: Macroeconomic Measures: Unemployment and Inflation

Who Counts in Unemployment?

  • Discouraged Workers: those who have stopped looking for employment due to the lack of suitable positions available
  • Out of the Labor Force: those who are not working and not looking for work – whether they want employment or not; also termed “not in the labor force”
  • Underemployed: individuals who are employed in a job that is below their skills

Who’s In or Out of the Labor Force?

Calculating the Unemployment Rate

  • Labor Force Participation Rate: this is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job
  • Unemployment Rate: the percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs

Calculating the Unemployment Rate cont.

  •  

Based on the data in Table 1, what’s the unemployment rate in 2016? In this example, the unemployment rate can be calculated as 7.7 million unemployed people divided by 159.1 million people in the labor force, which works out to an 4.8% rate of unemployment. Read on to walk through the steps of calculating this percentage.
Table 1. U.S. Employment and Unemployment, 2016

 Total adult population over the age of 16

 253.5 million

 In the labor force

 159.1 million (62.8%)

 Employed

 151.4 million

 Unemployed

7.7 million

 Out of the labor force

94.4 million (37.2%)


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