© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-1 Chapter Seventeen Created by: Erica Morrill, M.Ed Fanshawe College Unemployment: Meaning and Measurement

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-2 Chapter Focus  Measurement of unemployment  Incidence and duration of unemployment  Canadian unemployment trends  Does unemployment rate accurately reflect hardship?

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-3 Measuring Unemployment  Labour Force Survey  Census  Unemployment Insurance Claimants

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-4 Canadian Experience  Fluctuated widely between  Due to cyclical fluctuations  Great Depression  World War II 

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-5 Measurements  Unemployment rate  measure of aggregate of labour market activity and degree of utilization  Labour force participation rate  Ratio of labour force to working age population  Employment rate  ratio of employment to the population

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-6 Hidden Unemployment/Marginal Labour Force Attachment  Individuals may not be classified as unemployed  Discourage worker  Workers waiting to be recalled after 6 month layoffs  Individuals working fewer hours than they wish  Temporarily employed

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-7 Labour Force Dynamics  Flows between the labour force states are large compared to the stocks  Gross flows are huge compared to net  Many of the unemployed individuals are employed next month

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-8 Incidence and Duration of Unemployment  Keys to understanding unemployment  flows between states  stocks in each state  Incidence of unemployment  portion of unemployed at any period  Duration of Unemployment  length of time spent in unemployed state

© 2002 McGraw-Hill Ryerson Ltd.Chapter 17-9 Changing Perspectives on Unemployment  Understanding unemployment has implications for public policy  Conclusions  lengthy spells of unemployment  employment is not always found  distribution of unemployment

© 2002 McGraw-Hill Ryerson Ltd.Chapter The Divergence of the Canada and U.S. Unemployment Rates  Postwar period  Canada’s unemployment rate tracked the U.S.  Since 1982  permanent or structural difference may be evident  decline in the incidence of unemployment in U.S.  Longer duration of unemployment in Canada

© 2002 McGraw-Hill Ryerson Ltd.Chapter Unemployment as a Summary Statistic  Unemployment is an labour market indicator  aggregate state of the economy  tightness/looseness of labour market  extent of hardship  unutilized labour supply  Imperfect and supplemented with additional measures

© 2002 McGraw-Hill Ryerson Ltd.Chapter End of Chapter Seventeen