LABOUR FORCE PARTICIPATION RATE

 Labour force participation rate: The productive capability of any economy depends on the
proportion of adults in the labour force.
𝑁𝑢𝑚𝑏𝑒𝑟 𝑖𝑛 𝑡ℎ𝑒 𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒

𝐴𝑑𝑢𝑙𝑡 𝑃𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛
 Women have been more employed and it keeps going up.
UNEMPLOYMENT
 The rate rises during contraction and falls during expansions
Various groups
 The unemployment rate says nothing about who is unemployed or for how long. The overall
rate masks wide differences in the labour force based on education, immigrant status,
gender, and age.
 Education provides some insurance against unemployment.
 It also differs based on immigrant status
 Young workers enter the labour force with little education or job experience, so they take
unskilled jobs and are the first laid off in the economy slows down.
o Also move in and out of the labour force more frequently as they juggle school
and demands.
 Since 1990, the unemployment rate has been lower in women than for men.

Unemployment Varies across Occupations and Regions

 Professional and technical workers experience lower unemployment rates than blue-collar
workers
 Partly because certain occupations dominate labour markets in certain regions, and times.
Unemployment rates vary by region.
 The national unemployment rate masks differences across the country and provinces.

Source of Unemployment
 There are four sources of unemployment:
1. Frictional
2. Seasonal
3. Structural
4. Cyclical
Frictional Unemployment
 Employers do not always hire the first applicant who comes through the door; job seekers do
not always accept the first offer.
 Both employees and job seekers need time to explore the job market.
 Source of frictional unemployment: The time required to bring together employers and job
seekers
 Frict.. does not last long, and it results in a better match between workers and jobs  the
economy works more efficiently
 Not concerned with frict. Unemployment
Seasonal Unemployment
 Unemployment caused by seasonal changes in labour demand during the year
o Lifeguards, winter shovels
 Monthly employment data are seasonally adjusted to smooth out the unemployment
discrepancies that result from seasonal factors. Policy makers and economists are not that
concerned about seasonal unemployment.

Structural Unemployment
 Unemployment that arises from a mismatch of skills or geographic locations
 The unemployed workers often do not have the skills in demand or do not live where their
skills are demanded.
 This occurs because changes in tastes, technology, taxes, and competition reduce the
demand for certain skills and increase the demand for other skills.
 Poses more of a problem because workers must either develop their skills demanded in the
local job market or look somewhere else
 Available jobs may be in regions where the living cost is much higher.
o Federal retraining programs aim to reduce structural unemployment

Cyclical Unemployment
 As output declines during recessions, firms reduce their demand for nearly all resources,
including labour.
 Increases during recessions and decreases during expansions.

Long-term unemployed: Those out of work for a year or more. Special concern to policy makers.
The economy is viewed as operating at full employment (if there is no cyclical unemployment).
o This is called the “natural rate” of unemployment
o Means low unemployment (not 0)
o Even then, there is some frictional, structural, and seasonal unemployment