ModuleThe Meaningand Calculation of Unemployment

KRUGMAN'SMACROECONOMICS for AP*

12

Margaret Ray and David Anderson

What you will learnWhat you will learn

in thisin this ModuleModule::

• How unemployment is measured

• How the unemployment rate is calculated

• The significance of the unemployment rate for the economy

• The relationship between the unemployment rate and economic growth

Defining and Measuring Defining and Measuring UnemploymentUnemployment

•Labor Force Participation Rate

•Unemployment Rate

Labor forceLabor force participation rate = 100

Population age 16 and older

•Employed

•Unemployed

•Labor Force

The Significance of the The Significance of the Unemployment RateUnemployment Rate

• Indicator of employment opportunity

• Overstating the true level of unemployment

• Understating the true level of unemployment

• discouraged workers

• marginally attached workers

• underemployed

The Significance of the The Significance of the Unemployment RateUnemployment Rate

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Growth and UnemploymentGrowth and Unemployment

• Recessions and unemployment

• Economic expansions and unemployment

• Except

• Relationship between economic growth and unemployment

Figure 12.1 The U.S. Unemployment Rate, 1948–2010Ray and Anderson: Krugman’s Macroeconomics for AP, First

EditionCopyright © 2011 by Worth Publishers

Figure 12.2 Alternative Measures of Unemployment, 1994–2010Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition

Copyright © 2011 by Worth Publishers

Figure 12.4 Unemployment and Recessions, 1978–2010Ray and Anderson: Krugman’s Macroeconomics for AP, First

EditionCopyright © 2011 by Worth Publishers

Figure 12.5 Growth and Changes in Unemployment, 1949–2009

Ray and Anderson: Krugman’s Macroeconomics for AP, First Edition

Copyright © 2011 by Worth Publishers

Unnumbered Figure 12.1 Rocky Mountain LowRay and Anderson: Krugman’s Macroeconomics for AP, First

EditionCopyright © 2011 by Worth Publishers

July200

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