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Chapter 7: Problem 8

What is the difference between being unemployed and being out of the labor force?

Short Answer

Expert verified
The difference between being unemployed and being out of the labor force lies in the individual's engagement in the job-seeking process. Unemployed individuals are actively looking for work, while those out of the labor force are not. For example, a person actively searching for a job is considered unemployed, while a stay-at-home parent not seeking employment is considered out of the labor force.

Step by step solution

01

Unemployed Definition

An individual is considered to be unemployed if they are actively seeking employment but currently without a job. It's important to note that the person must be both jobless and actively searching for work to be classified as unemployed.
02

Out of the Labor Force Definition

Those who are out of the labor force are individuals who are neither employed nor actively searching for employment. People out of the labor force may include students, retirees, stay-at-home parents, or those who are not seeking employment due to personal reasons or disabilities.
03

Explanation of the Difference

The difference between being unemployed and being out of the labor force lies in whether the individual is actively seeking employment or not. Unemployed individuals are actively looking for work, while individuals out of the labor force are not engaged in the job-seeking process.
04

Example

Let's consider two individuals, A and B. Person A has been jobless for a month, but they are actively searching and applying for jobs. Person A is considered unemployed. On the other hand, Person B is a stay-at-home parent who is not seeking employment. Person B is considered to be out of the labor force. In summary, the key difference between being unemployed and being out of the labor force is the individual's involvement in active job-seeking behavior.

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Most popular questions from this chapter

Assess whether the following would be counted as "unemployed" in the Current Employment Statistics survey. a. A husband willingly stays home with children while his wife works. b. A manufacturing worker whose factory just closed down. c. A college student doing an unpaid summer internship. d. A retiree. e. Someone who has been out of work for two years but keeps looking for a job. f. Someone who has been out of work for two months but isn't looking for a job. 8\. Someone who hates her present job and is actively looking for another one. h. Someone who decides to take a part time job because she could not find a full time position.

A govemment passes a family-friendly law that no companies can have evening, nighttime, or weekend hours, so that everyone can be home with their families during these times. Analyze the effect of this law using a demand and supply diagram for the labor market: first assuming that wages are flexible, and then assuming that wages are sticky downward.

What is frictional unemployment? Give examples of frictional unemployment.

Would you expect the natural rate of unemployment to remain the same within one country over the long run of several decades?

A country with a population of eight million adults has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force. What's the unemployment rate? What share of population is in the labor force? Sketch a pie chart that divides the adult population into these three groups.
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