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What factors make it difficult to determine the unemployment rate? Why is it difficult to distinguish between frictional, structural, and cyclical unemployment? Why is unemployment an economic problem?
The U.S. Bureau of Labor Statistics (BLS) conducts a nationwide random survey of some 60,000 households each month to determine who is employed and who is not employed. In a series of questions, it asks which members of the household are working, unemployed and looking for work, not looking for work, and so on. From the answers, it determines an unemployment rate for the entire nation (McConnell, C. R., Brue, S.L., & Flynn, S.M, 2009). It is a far few samples to measure acurate unemployment rate. It does not distinguish between part time as well as full time workers.
Fictional unemployment is the time when some workers are “between jobs.” Some of them will be moving voluntarily from one job to another. Others will have been fired and will be seeking reemployment. In addition to those between jobs, many young workers will be searching for their first jobs. Frictional unemployment blurs into a category called structural unemployment. Changes over time in consumer demand and in technology alter the “structure” of the total demand for labor, both occupationally and geographically. Unemployment that is caused by a decline in total spending is called cyclical unemployment and typically begins in the recession phase of the business cycle. As the demand for goods and services decreases, employment falls and unemployment rises.(McConnell, C. R., Brue, S.L., & Flynn, S.M, 2009)
Reference
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin.
The U.S. Bureau of Labor Statistics (BLS) conducts a nationwide random survey of some 60,000 households each month to determine who is employed and who is not employed. In a series of questions, it asks which members of the household are working, unemployed and looking for work, not looking for work, and so on. From the answers, it determines an unemployment rate for the entire nation (McConnell, C. R., Brue, S.L., & Flynn, S.M, 2009). It is a far few samples to measure acurate unemployment rate. It does not distinguish between part time as well as full time workers.
Fictional unemployment is the time when some workers are “between jobs.” Some of them will be moving voluntarily from one job to another. Others will have been fired and will be seeking reemployment. In addition to those between jobs, many young workers will be searching for their first jobs. Frictional unemployment blurs into a category called structural unemployment. Changes over time in consumer demand and in technology alter the “structure” of the total demand for labor, both occupationally and geographically. Unemployment that is caused by a decline in total spending is called cyclical unemployment and typically begins in the recession phase of the business cycle. As the demand for goods and services decreases, employment falls and unemployment rises.(McConnell, C. R., Brue, S.L., & Flynn, S.M, 2009)
Reference
McConnell, C. R., Brue, S.L., & Flynn, S.M. (2009). Economics: Principles, problems, and policies (18th ed.). New York: McGraw Hill/Irwin.