Unemployment (1 Viewer)

[herbie0822]

How would discouraged workers ie hardcore and long-term unemplyed people affect the participation rate and the unemployment rate, referring to the equations.....?
What exactly does the labour force consist? Employed and unemployed? The working age population which is 15+, does it include everyone who is over 15 or only the people who is over 15 and are employed or actively seeking work?

 

[williamc]

How would discouraged workers ie hardcore and long-term unemplyed people affect the participation rate and the unemployment rate, referring to the equations.....?
What exactly does the labour force consist? Employed and unemployed? The working age population which is 15+, does it include everyone who is over 15 or only the people who is over 15 and are employed or actively seeking work?

Attempt without textbook:

Hardcore umemployed don't affect the participation rate because they arn't actively seekign work, and i don't think they affect the unemployment rate becasue they are ineligble for work.
Long term unemployment may be included if they are actively seekign work, although after 12 months or more off the job there is a higher chance of decreased motivation. Long term unemployed is counted in the unemployment rate.
Labour force consists of all the unemployed people and employed people. No it doesn't include everyone over 15. For eg. I'm 16 and a "full time student", i would actually be counted in the hidden employment which of course can't be measured.

ps. could be errors i learn this a while ago and without notes.

 

[bmwz4]

the labour force participation rate is the percentage of the working age population! - those aged 15 years and over - who are in the labour force, either working or actively seeking work (so employed and unemployed).

 

[herbie0822]

Thanks alot guys...
But how would discouraged workers affect the participation and unemployment rate?

 

[williamc]

Thanks alot guys...
But how would discouraged workers affect the participation and unemployment rate?

I'm not sure i understand that question.

 

[Robbeh]

Definition:

• Unemployment are those who are out of work but actively seeking work... needs to be checking advertisements for work, willing and responds to job adverts or registered with an enmployment agency.
• Participation rate refers to the percentage of the population, aged 15 and over, in the labour force that is either employed or unemployed
• Labour force consists of all the employed and unemployed persons in the country at any given time who do work more than 1 hour per week (aka workforce).
• Long term unemployed are those who have been out of work for 12 months or longer - they are the structurally unemployed (reason: hysteresis - because they've been out of work for so long they have lost skills for work).
• Hardcore unemployed are long term unemployed and unemployable because of personal circumstances -- mental, physical disabilities, drug abuse and anti-social behavior.

How would discouraged workers ie hardcore and long-term unemplyed people affect the participation rate and the unemployment rate, referring to the equations.....?

Because hardcore/long-term unemployed can work, they will remain in the participation rate (think of it as the total % of people who have the physical capacity to work). On the other hand, it's hidden unemployment because unemployment is defined as those who are unemployed but actively seeking employment so if you're hardcore/long-term then you do not fall within those definitions.

What exactly does the labour force consist? Employed and unemployed? The working age population which is 15+, does it include everyone who is over 15 or only the people who is over 15 and are employed or actively seeking work?

Working age population = every person aged 15 or above.
Labour force = all those in the working age population who performs more than 1 hour of work per week.
Participation rate = labour force / working age population (as a percentage - ie *100)

Thanks alot guys...
But how would discouraged workers affect the participation and unemployment rate?

To reiterate, discourage workers are those not actively seeking work. The Australian Bureau of Statistics do not count them in the unemployment figures and they are therefore, (structurally) hidden unemployment.

 

[redom]

Thanks alot guys...
But how would discouraged workers affect the participation and unemployment rate?

Theoritically if an economy began to grow, the participation rate will increase. This the because those hidden unemployed people will be more inclined to 'actively seek work' as they believe their chances of finding employment are greater. From the definitions posted above, the labour force consists of those working or actively seeking work, and hence the hidden unemployed are not part of the labour force. So as an economy moves into a boom in the business cycle, the labour force increases, whilst the W.A Population will remain the same(ceterus parabis), and thus increases the participation rate.

Now this growth may not necessarily lower unemployment rates in this instance. Unemployments definition-- are those actively seeking work. When these discouraged job seekers reenter the labour force, the add to the unemployment rate. Jobs will be created, but the rate of unemployment may not necessarily decrease, particurlarly in the short term. I think Costello was arguing the same case a few years ago (not quite sure) at a time when unemployment rose slightly after significant growth was achieved.

 

[Robbeh]

Off-topic: Anyone get the House joke?