Question

Why is the Job Openings and and Labor Turnover Rates data a better estimate than the Civilian Unemployment rate in showing changes in the state of a labor market.

Answer 1

Ans: Job openings and Labor turnover rates (JOLTS) tell us about the no of job openings available and the labor turnover rate is calculated by dividing the number of employees who left the company by the average number of employees in acertain period of time. They basically are a better measure because they lay emphasis on the job openings, hires and separations and they give us a more realistic picture regarding the employment because employment include persons on the payroll who worked or received pay for the pay period that includes the 12th day of the reference period. It tells us regarding the people who are truely working or in the labor market, who are removed or stop working particularly in the informal sector where there is no formal contract. Particularly where it is not possible to know whether a person is employed or not it is JOLTS which tell us how many persons rae moving out of the labor market. It gives us true picture regarding the trends in labor market.

Civilian Unemployment Rate is calculated by dividing the unemployed people by the total sizeof labor force and is expressed as a percentage. People who are jobless, looking for jobs and available for work are considered unemployed. It is a measure of unemployed people, it does not tell us about the movements in labor market, It does not measures the movements in terms of job openings, how many people are laid off or removed or retired from the labor market. It just only indicates how the rate ofunemployment, It does not measures the movements or trends in labor market. That 's why the estimates of JOLTS are more accurate than the civilian unemployment rate.