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Journal of Economic Perspectives
http://e-jep.org
Conversable Economist
http://conversableeconomist.blogspot.org
Professional website
http://timothytaylor.net
Definition of unemployment from website of the U.S. Bureau of
Labor Statistics:
“Persons are classified as unemployed if they do not have a job,
have actively looked for work in the prior 4 weeks, and are currently
available for work. Persons who were not working and were waiting
to be recalled to a job from which they had been temporarily laid off
are also included as unemployed. Receiving benefits from the
Unemployment Insurance (UI) program has no bearing on whether a
person is classified as unemployed.”
"discouraged" workers: "those who did not actively look for work in the prior 4 weeks for
reasons such as thinks no work available, could not find work, lacks schooling or training,
employer thinks too young or old, and other types of discrimination."
"other persons marginally attached to the labor force : “those who did not actively look for
work in the prior 4 weeks for such reasons as school or family responsibilities, ill health, and
transportation problems, as well as a number for whom reason for nonparticipation was not
determined."
Labor force participation rate
Source: Bureau of Labor Statistics
To avoid misunderstanding, let me emphasize that by using the term "natural"
rate of unemployment, I do not mean to suggest that it is immutable and
unchangeable. On the contrary, many of the market characteristics that
determine its level are man-made and policy-made. In the United States, for
example, legal minimum wage rates, the Walsh- Healy and Davis-Bacon Acts, and
the strength of labor unions all make the natural rate of unemployment higher
than it would otherwise be. Improvements in employment exchanges, in
availability of information about job vacancies and labor supply, and so on, would
tend to lower the natural rate of unemployment …”
Milton Friedman, “The Role of Monetary Policy,” American Economic Review,
March 1968, p. 9.
What’s a Job Opening?
Job is "open" only if it meets all three of the following conditions:
A specific position exists and there is work available for that position. The
position can be full-time or part-time, and it can be permanent, short-term, or
seasonal, and
The job could start within 30 days, whether or not the establishment finds a
suitable candidate during that time, and
There is active recruiting for workers from outside the establishment
location that has the opening.
DOES NOT INCLUDE:
Positions open only to internal transfers, promotions or demotions, or recall from
layoffs
Openings for positions with start dates more than 30 days in the future
Positions for which employees have been hired, but the employees have not yet
reported for work
Positions to be filled by employees of temporary help agencies, employee leasing
companies, outside contractors, or consultants. A separate form is used to collect
information from temporary help/employee leasing firms for these employees.
Upper left – not much labor supplied per vacancy
Lower right – lots of labor supplied for every vacancy
Source: Bureau of Labor Statistics, July 2012 JOLTS report.
Figure 3
Historical shifts in the Beveridge curve, 1951-2011.
6
1970s
1960s
5
Vacancy rate
4
1950s
1980s
3
2000s
2
1
2
4
6
8
10
12
Unemployment rate
Mary C. Daly, Bart Hobijn, Ayşegül Şahin, and Robert G. Valletta, “A Search and Matching Approach to Labor Markets:
Is the Natural Rate of Unemployment Rising?” Journal of Economic Perspectives, Summer 2012.
http://www.policyuncertainty.com/
“Between 1992 and 2008, average annual growth in exports was 18
percent in China and 14 percent in India. These two are not the only
significant new players in global trade. Consider the next 15 middleincome countries, which (in order of market size) are Brazil, Korea,
Mexico, Russia, Argentina, Turkey, Indonesia, Poland, South Africa,
Thailand, Egypt, Colombia, Malaysia, the Philippines, and Chile. In 2008,
they each had a GDP above $100 billion; as a group, their collective GDP
is 1.4 times China and India’s combined total. From 1992 to 2008, these
15 countries had average annual export growth of 8 percent. During this
period, low- and middle-income countries overall saw their share of global
exports more than double, from 21 to 43 percent.”
Gordon Hanson, “The Rise of Middle Kingdoms: Emerging Economies in
Global Trade,” Journal of Economic Perspectives, Spring 2012, p. 42.
“Full employment does not mean literally no
unemployment; that is to say, it does not mean that every
man and woman in the country who is fit and free for work
is employed productively every day of his or her working
life ... Full employment means that unemployment is
reduced to short intervals of standing by, with the certainty
that very soon one will be wanted in one's old job again or
will be wanted in a new job that is within one's powers.”
William Henry Beveridge (1944), Full Employment in a
Free Society