MankiwChapter28Unemployment
SuggestedStudyTopics
ChapterOverview–TheU.S.Dept.ofLabor’sBureauofLaborStatistics(B.L.S.)ischargedwith
measuringandpublishingeconomy-wideemploymentlevels.Economywideandregional
unemploymentannouncementsareofspecialimportancetoeconomistsbecausetheyconcern
themselveswiththeextenttowhichscarcelaborresourcesareactivelyengagedinproductive
activity.Further,theannouncementscanbeseenasindicatorsofbothpresentandfuture
economicperformanceandactivity.
TheB.L.S.usesastructuredapproachingatheringandpublishingunemploymentstatistics.Few
Americansarefamiliarwiththeactualofficialprocessofgatheringunemploymentstatisticsand
stillfewerunderstandthetruemeaningandsignificanceofthereleaseddata.
TheProcess–TheU.S.populationisabout330Millionpersons.Eachmemberofthepopulation
isamemberoftheU.S.HouseholdSectormadeupofapproximately180Millionhouseholds.
EachweektheB.L.S.doesanextensivesurveyof72,000U.S.households.(Thesamplesizeis
72,000ofthe180millionhouseholds.)Askingabatteryofspecificsurveyquestions,theB.L.S.
mustdetermine:
1) HowmanyU.S.householdsare“intheworkforce”and
2) HowmanyU.S.householdsare“NOTintheworkforce”.
The“UnemploymentRate”isthepercentageoftheU.S.Workforcethatis“unemployed”.In
ordertobeconsideredofficiallyunemployedapersonmustbe:
1) Overtheageof16years;
2) Notworkingatthetimeofthesurveyand
3) Lookingforwork.
ALLTHREEcharacteristicsarenecessaryinordertobeofficiallyconsidered“unemployed”by
theB.L.S.Simplynotworkingorbeingwithoutajobisnotgroundsforbeingconsidered
“unemployed”.
Masteryofthefollowingconcepts,principles,anddefinitionsissuggested:
Therelationshipbetweenthesizeofanation’sworkforceandanation’sproductionpossibilities
Calculationofanation’sunemploymentrate
Therelationshipbetween/amonganation’seconomicgrowthrates,unemploymentrates,and
durationofunemployment.
Thetreatmentof“discouragedworkers”intheunemploymentmeasurementprocess
Thedefinitionofandthetreatmentof“underemployed”workersintheB.L.S.unemployment
measurementprocess.
Thedefinitionofandthetreatmentofthe“phantomunemployed”
Thedefinitionofandsituationalexamplesof“frictionalunemployment”
Thedefinitionofandsituationalexamplesof“structuralunemployment”
Thedefinitionofandsituationalexamplesof“cyclicalunemployment”
Explanation/concept:Whyfrictionalandstructuralunemploymentisconsideredinevitableand
unavoidable.
TheEconomicsdefinitionof“FullEmployment”
Theeconomy-wideconditionsthathavetobepresentforaneconomytobeatFull
Employment
TheMethodology:Thestartingpointisthe