Chapter 28 is all about employment and how it is measured, what types exist, and the reason for its existence. The economy’s natural rate of unemployment is the amount of unemployment that the economy normally experiences. There are three kinds of workers: employed, unemployed, and not in labor force. Employed refers to paid employees, both full time and past time. Unemployed workers are people who were once available for work and have tried finding employment. People not in the labor force are neither looking for a job or employed. Discouraged workers are also people who would have liked to work, but have given up looking for a job, so therefore have been eliminated from the labor force.
The labor force consists of employed and unemployed added together, and the unemployment rate is the number of unemployed divided by the labor force times 100. The labor force participation rate is the labor force divided by the adult population times 100.
There are two kinds of unemployment: frictional and structural. Frictional employments is employment that comes from workers taking time to search for jobs best suitable to their interests. Structural unemployment that unemployment hat results from lack of available jobs in the market. Job search is the process by which workers find appropriate jobs given their tastes and skills.
Unemployment insurance is a government program that partially protects workers’ incomes when they become unemployed, explaining why people could be not considered to be part of the labor force. People respond to incentives, so they no longer look for a job because they are still getting paid.
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