Ch 14 Econ

Creative destruction

a term coined by economist Joseph Schumpeter that refers to the ongoing process of technological innovation an industrial decline

Cyclical unemployment

unemployment associated with downturns in the business cycle

Efficiency wages

a wage that exceeds that market wage. Encourage worker productivity but also plays a role in creating unemployment

Labor force participation rate

the labor force divided by the working age population

U3

the official unemployment rate

Employed

the condition of having a job

Full employment

the level of employment that exists when the economy is being productively efficient. Associated with an economy at the natural rate of unemployment

Unemployed

the condition of not having a job but being a member of the labor force. To be considered unemployed, a person must be jobless yet actively searching for a job by having searched in the last four weeks.

U6

the most all-inclusive measure of unemployment includes U1-U5

Employment-to-population ratio

the number of employed people divided by the working age population

Labor force

the number of employed plus unemployed people age sixteen and over

Structural unemployment

unemployment that is caused by the permanent destruction of jobs in a dying industry, a mismatch between the skills necessary for employment and the seekers' skill set, and government programs that create incentive to remain unemployed

Frictional unemployment

voluntary unemployment that occurs when a person enters the labor force and looks for a job

Unemployment rate

it is equal to the number of unemployment persons divided by the number of people in the labor force

Discourage workers

people who, for whatever reason, have given up the job search and are not officially classified as unemployed

Natural rate of unemployment

the rate of unemployment that exists when there is not cyclical unemployment present in the economy. The natural rate of unemployment is through to be independent of the inflation rate

U4

the unemployment rate that adds discourage workers to the official unemployment rate

U5

the unemployment rate that includes all marginally attached workers

U1

the unemployment rate that only includes people in employment fifteen weeks or longer, as published by the bls

U2

the unemployment rate that only includes people who have lost a job as opposed to those who have quit or those who have entered or reentered the labor force

Marginally attached workers

these are people ready and available to work who have conducted a job search within the past twelve months but have not searched in that last four weeks and are therefore not included in official unemployment statistics