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Unemployment

Unemployment. Trends. The idea: Want to measure how fully a factor (resource) is utilized A problem: How would you even define the factor? People who could produce How would you measure the factor? Number of people Hours worked Effort x hours?. The approach: Labour Force Survey

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Unemployment

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  1. Unemployment Trends

  2. The idea: • Want to measure how fully a factor (resource) is utilized • A problem: • How would you even define the factor? • People who could produce • How would you measure the factor? • Number of people • Hours worked • Effort x hours?

  3. The approach: • Labour Force Survey • Monthly • “did you work?” • “did you look for work?” • UR = E/L

  4. It’s not that good a measure: • Inactive seekers (to qualify for EI, e.g.) • Discouraged workers • Underemployed workers • Many possible measures of labour underutilization • Alternative 1: registered as unemployed • Usually only those eligible for benefits care to register • Alternative 2: employment rate • = E/(working-age population) • No guessing the status • Masks the problem • Alternative 3: LFPR • = L/(working-age population)

  5. Canadian Trends • Unemployment rate: • Large short-run fluctuations • Upward trend in long run

  6. A flow model • Flows and equilibrium • Incidence I • Duration D • UR = I x D employed not in labour force unemployed

  7. Canadian Trends • Youth unemployment is high • Search for a job that fits • School and such • Trial employment • Short resume • Female unemployment • higher than male in 1970s-80s • About same since • Geographical • UR increases when one goes east • Higher than American UR • Hasn’t always been • Macroeconomics explains part • EI is more generous • Definitions and methodologies

  8. Kinds of unemployment • Frictional • Seasonal • Structural • Frictional + structural + seasonal = natural rate (full employment) • Cyclical unemployment • Natural rate seems to go up • Demographics • EI • Constant restructuring

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