1. DO Now
• Are we currently in a recession in the United States?
How do you know? Use your notes and identify your
indicators as lagging, coincident, or leading.

2. Agenda
1. Do Now
2. Review
3. Notes- Unemployment

3. Objectives
• Distinguish among 4 types of employment.
• Discuss the unemployment rate and describe how it
differs over time and across groups.
• Explain who is eligible for unemployment benefits in
the United States.

4. Unemployment
• 59% of the the unemployed
lost their previous job.
• 7% quit their previous job.
• 10% were entering the labor
market for the first time.
• 24% were reentering the
market.
Why are so many people
unemployed when there are so
many jobs available?

5. Frictional
Unemployment
• The time it takes for the
right employee to find the
right employer.
• Does not last long.
• Better match up between
workers and jobs.
• Good for the economy!

6. Structural
Unemployment
• Job seekers do not have the
skills demanded.
• More of a problem than
frictional unemployment
because the unemployed
may need to use a new skill.

7. Seasonal
unemployment
• Caused by seasonal changes
in labor demand.
• Some choose seasonal jobs
to fit their lifestyle.
• Many know they will be
unemployed in the off
season.

8. Cyclical
unemployment
• the result of a decline in
the need for laborers due to
a recession.
• Caused by the recession
phase of the business cycle.
• Increases during a recession
and decrease during an
expansion.

9. Full employment
• There is no cyclical
unemployment.
• Does not mean 0
unemployment.
• Low unemployment
between 5%-6%
• Frictional, seasonal, and
structural unemployment
still exist

10. Problems with
estimates
• Discouraged workers- those
who have stopped looking
for jobs.
• Underemployment- those
who work part-time jobs or
jobs they are overqualified
for.
• Counting those not looking
for work as unemployed.
• Count people working in the
underground economy as
unemployed.

11. Unemployment Rate
• Most widely reported
measure of nation’s
economic health.
• Noninstitutional adult
population- all people 16
years or older except people
on the military, prison, or
psychiatric hospital.
• Unemployment rate- the
number of people without
jobs who are looking for
work divided by the number
in the labor force.
April 2011

12. Unemployment
benefits
• Unemployment benefits-
Cash transfers to
unemployed workers who
lost their jobs, actively seek
work, and meet other
qualifications.
• Can receive up to 6 months.
• Unemployment benefits
extended during a recession.

13. Think
• What are the risks of providing unemployment
benefits for people who have lost their jobs? What are
the benefits?

14. Assignment
Task: Imagine you are in control of who receives
unemployment benefits in the country. What three
requirements would you make for people to be eligible?
Fully explain your requirements (3 sentences each).
Provide an example of a person who you think should
receive benefits. Provide an example of a person who
you think should not be provided benefits. (One juicy
hamburger with both examples in it.)