Unemployment - The unemployment rate is the percentage of people who are willing and able to work but Who are not working? - Cyclical unemployment is that which results from fluctuations in economic activity - Structural unemployment is that caused by the institutional structure of an economy or by Economic restructuring making some skills obsolete. Unemployment as a Social Problem - The industrial revolution changed the nature of work and introduced unemployment as a Problem for society - There was a shift to wage labor and to a division of responsibilities - The industrial revolution created the possibility of cyclical unemployment and changed how Families dealt with unemployment. - Early capitalism had an unemployment solution Unemployment as Government’s Problem - As capitalism evolved, the fear of hunger was no longer an acceptable answer to Unemployment - In the employment act of 1946, the U.S government took responsibility for unemployment - Full employment is an economic climate where nearly everyone who wants a job has one - Frictional unemployment is unemployment caused by people entering the job market and People quitting a job just long enough to look for and find another job. Target Rate of Unemployment - The target rate of unemployment is the lowest sustainable rate of unemployment that policy Makers believe is achievable under existing conditions. - The appropriate target rate of unemployment is debatable, but most economists place it Around 5% - The targets rate of unemployment changes due to - Inflation rates - Demographics - Social and institutional structures - Changing government institutions Whose Responsibility is Unemployment? - Classical economists believe that individuals are responsible for their own jobs - If people really want a job, they will find one - Keynesian economists tend to say that society owes people jobs commensurate with them Training or past job experience - Jobs should be close enough to home so that people don’t have to move