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Unemployment Rate

Unemployment Rates Defined

Unemployment Rates Defined

Although the public may be more concerned about the sum total of individuals who are out of work, when economists or governments discuss unemployment they prefer to address unemployment rates both because it can make comparisons easier and because it can be easier to discuss unemployment as a ratio than in absolute numbers. 

Looking at the unemployment rate or employment rate automatically corrects for the natural variations in the numbers of people employed due to population changes. The unemployment rate is identified by determining the ratio between the unemployed workers and the total labor force. 

The International Labour Organization, a division of the United Nations identifies unemployed workers as individuals who are not working at the time the unemployment rate is calculated, but are willing, available, and able to work for pay, and have been actively searching for work. In order to be considered actively searching, an individual must

·      Have contact with a potential employer,

·      Go on job interviews,

·      Contact job placement agencies

·      Submit resumes or applications

·      Respond to advertisements

·      or conduct come other manner of actively searching for jobs within the previous four weeks.

Unemployment rates may not be entirely accurate because not all job openings are publicly advertised, and some individuals who want to and are able to work may become frustrated if they remain unemployed for long periods of time, thus abandoning their job search and therefore failing to meet the official standards to be considered unemployed despite remaining jobless.

Must Know Natural Rate of Unemployment

Must Know Natural Rate of UnemploymentThe natural rate of unemployment is also known as the structural unemployment rate. The natural rate of unemployment is a conception to analyze economic activity that was developed by famed Nobel Laureates in Economics Milton Friedman and Edmond Phelps. The two men were awarded their Nobel Prizes for developing the concept.

The idea of the natural rate of unemployment represents a hypothetical rate of unemployment that would be consistently even with aggregate production over a long-term projection. This hypothetical natural rate of unemployment exists in the absence of frictions such as the price adjustments that are present in other conceptions of the labor and goods markets. 

The natural rate of unemployment developed by Friedman and Phelps corresponds to the classical view of the determination of activity. The main factor that determines the natural rate of employment is the economy’s supply side, or the production possibilities and economic institutions. If permanent mismatches do exist in the labor market or real wage level of rigidity, the natural rate of unemployment may be forced to include involuntary unemployment. 

In reality, the natural rate of unemployment does not develop in part because of aggregate demand factor. On a policy level, this implies that it is impossible to permanently reduce through manipulating demand management policies, such as monetary policy, though these policies may be usable to stabilize actual unemployment rates. 

The framework of the natural rate of unemployment holds that the only way to reduce the natural rate of unemployment is by addressing the supply side of the economy.

Unemployment Rate Overview

Unemployment Rate Overview

Unemployment Rate b/g
The unemployment rate is, under the definition created by the United Nation agency the International Labour Organization, defined as those individuals who have sought employment in the previous four weeks. The unemployment rates only include individuals are in contact with an employer, going on job interviews, contacting job placement agencies, sending out resumes, completing applications, and respond to advertisements.

Natural Rate of Unemployment
The natural rate of unemployment is a theory developed by Milton Friedman and Edmund Phelps, each of whom received Nobel Prizes in Economics for their work to develop the theory which represents a hypothetical unemployment rate that is off set by the aggregate levels of production in the economy.

Great Depression Unemployment Rate
The Great Depression unemployment rate was the highest unemployment rate in the history of the United States. Until the collapse of the housing market in the first decade of the 21 century, the United States of America had not approached the Great Depression unemployment rate in several decades. 

Current Unemployment Rate
The current unemployment rate appears to have plateaued around 9.6 percent. However, the current unemployment rate is one of the highest levels of a prolonged unemployment rate in the history of the United States of America. However, as is often the case, the current unemployment rate varies greatly across demographics, though the current unemployment rate follows traditional trends in demographic unemployment.