22.1 LABOR MARKET INDICATORS Two Main Labor Market Indicators The unemployment rate The labor force participation rate Unemployment rate is the percentage of people in the labor force who are unemployed. Unemployment rate = Number of people unemployed x 100 Labor force In August 2011, the unemployment rate was 9.1 percent.
22.2 LABOR MARKET TRENDS AND FLUCTUATIONS U-4 U-3 plus discouraged workers U-5 U-4 plus other marginally attached workers U-6 U-5 plus part time for economic reasons (as percentages of labor force plus unemployed in the added category)
As the unemployment rate fluctuates around the natural unemployment rate in part (a), the output gap fluctuates in part (b). When the unemployment rate is below the natural rate, the output gap is positive. When the unemployment rate exceeds the natural rate, the output gap is negative. 22.3 UNEMPLOYMENT AND FULL EMPLOYMENT