ECO 1102 Lecture 5: Chapter 10
11 Feb 2019
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Department
Course
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Identifying unemployment
- Employment (E): persons who did any paid work or who are not in work due to illness
and disability, personal or family responsibilities, vacation or labour dispute
- Unemployed (U): Persons who are available to paid work and either looked for a job in
the previous four weeks or expect to start a job within the next four weeks or on a
temporary layoff and expect to be recalled
- Labour Force (LF): the total number of workers who are either employed or
unemployed (those who work and want to work)
- Not in labour force: everyone else
- Military officer not in the workforce
Canadian Labour Market at a glance
- Stats Canada publishes labour market on various demographics like:
- Age and gender
- Region
- Education
- Immigrant status
- Aboriginal status
- Full-time versus part-time work
- These data reveal widely different labour market experiences for different groups
Unemployment Rates by age and gender…
Average spell of unemployment lasted 19.6 weeks (2008)
- Average hides what's important
- 3 people are unemployed for 4 weeks another is unemployed for 52 weeks
- The problem only falls on the 4th person
- Care must be taken when interpreting data on employment
- So policy solutions designed to fix unemployment problems should be directed to those
with prolonged periods of unemployment
Duration of unemployment 2017…
Unemployment Rate and Labour Market
1. Sue lost her job and is looking for a new one.
- UR will rise because she is unemployed
- Suggests the labour market is worsening
- Therefore indicator is okay
2. Jon a steelworker who has been out of work since his mill closed last year, becomes
discourages and gives up looking for work.
- Jon is “discouraged worker” was unemployed but after giving up he has now left the
labour force
- The denominator of labour forces will fall therefore the percentage falls, and the
numerator of UR falls
- The UR falls because he is no longer unemployed
- This suggests that the labour market is improving but it is not therefore not an indicator
3. Sam, the sole earner of his family of 5, loses his job in research and takes a part-time job.
- Suggests that the labour market is not worsening but it is
- Still employed but he not doing a job of his skill level
- Therefore indicator is not okay
Therefore the unemployment rate does not always accurately reflect how well the labour market
is performing.
Does UR measure what want it to?
- Discouraged workers do not show up in unemployment
- Might be classified as unemployed
- UR statistics can be adjusted to take them into account
- Other people may claim to be unemployed but really are not
- Misinterpret the data; better classifies as not in the labour force
The Natural Rate of Unemployment
- The rate of unemployment to which the economy tends to return in the long run
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ECO 1102 Full Course Notes
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Document Summary
Employment (e): persons who did any paid work or who are not in work due to illness and disability, personal or family responsibilities, vacation or labour dispute. Labour force (lf): the total number of workers who are either employed or unemployed (those who work and want to work) Stats canada publishes labour market on various demographics like: These data reveal widely different labour market experiences for different groups. Average spell of unemployment lasted 19. 6 weeks (2008) 3 people are unemployed for 4 weeks another is unemployed for 52 weeks. The problem only falls on the 4th person. Care must be taken when interpreting data on employment. So policy solutions designed to fix unemployment problems should be directed to those with prolonged periods of unemployment. Unemployment rate and labour market: sue lost her job and is looking for a new one. Ur will rise because she is unemployed.
