Question

1. How does the Bureau of Labor and Statistics compute the labor force and the unemployment rate?
2. How does the current U.S. unemployment rate compare with unemployment rates in other developed countries and unemployment rates from U.S. history?
3. Define the following causes of unemployment: frictional, structural, and cyclical. Which of these causes is more paramount during a severe recession?
4. How might governments reduce the amount of: 1) frictional and 2) structural unemployment?
5. Why do unemployment rates in European countries tend to be higher than in the U.S.?
6. Does (a) automation/new technologies or (b) immigration increase the unemployment rate? Why or why not?
   

Answer 1

Answer 1:

The labor force in an economy is the sum of total number of employed and total number of unemployed people in an economy. people are considered as employed if they did any regular work at all for pay or profit during the survey reference week. This includes all part -time and temporary work as well as regular full time round the year employment. On the other hand, people are classified as unemployed if they do not have a job and have actively looked for a job in the prior four weeks and are currently available for work.

There are six different measures of unemployment rate in the economy:

a. U1: The percentage of labor force unemployed for 15 weeks or longer.

b. U2: The percentage of labor force who lost jobs or completed temporary work.

c U3: It occurs when people are without jobs and have actively looked for work within the past four weeks.

d. U4: It is U3 plus the discouraged workers who have stopped looking for work because of current economic conditions.

e. U5: It is U4 plus marginally attached workers and are able to work, but have not looked for work recently.

f. U6: It is U5 plus part -time workers who want to work full-time.