If the actual unemployment rate is above the natural rate, the economy is in recession, and if the actual rate is below the natural rate, inflation is expected to rise significantly (because the economy is overheating).
So what is the natural rate of unemployment and why is it not equal to zero? The natural rate of unemployment. natural rate of unemploymentis the unemployment rate that corresponds to potential GDP or, equivalently, long-term aggregate demand. In other words, the natural rate of unemployment is the rate of unemployment when the economy neither overheats nor falls into recession - the combination of frictional and structural unemployment.
For this reason, the natural rate of unemployment is the rate, where cyclical unemployment is zero. Note, however, that this does not mean that the natural rate of unemployment is zero, as there is frictional and structural unemployment.
How is natural unemployment calculated?
The overall unemployment rate is calculated by dividing the total number of unemployed people (U) by the total number of people in the labor force (LF). The labor force consists of adults of working age who want to work.
U ÷ LF = General unemployment rate
(FU + SU) ÷ LF = Natural Unemployment Rate
To calculate the natural rate, first add the frictional unemployed (FU) to the structural unemployed (SU) and then divide that number by the total labor force.
Types of unemployment
There are 3 types of unemployment:
Structural unemployment
frictional unemployment
Cyclical unemployment
The first two together are“ natural” , and the latter is the factor that causes inflation to either accelerate or slow down.
1. Structural unemployment is unemployment, which is due to the regulation of the minimum salary, trade unions, mismatch of skills of workers with the needs of employers or social benefits. The reason why this unemployment is considered“ natural” is that, that these barriers will always exist. For example, consider the minimum wage. The minimum wage set the price of labor above value. So firms decide not to hire workers. The situation will not change in the long term.
2. Frictional unemployment is unemployment resulting from job changes, moving, finding a suitable position. Usually this is not a negative phenomenon, since this factor has a temporary significance. However, since there is always a certain share of the labor market looking for new job, this unemployment will persist in the long run.
The natural rate of unemployment in the United States
Source: Fed
3. Cyclical unemployment is unemployment that is not part of the natural rate of unemployment. It is driven by a cycle of growth and decline., that is, either short-term fluctuations in aggregate demand or supply. In the long run, its equilibrium value tends to zero.
Cyclical unemployment occurs during a downturn in the business cycle when demand for goods and services declines and companies respond by cutting production and laying off workers. During an economic downturn, the number of workers exceeds the number of available jobs. The result is unemployment.
Economists use the cyclical unemployment rate to assess the health of the entire economy or its individual sectors. Cyclical unemployment can be short-term, lasting a few weeks for some people, or long term. It all depends on the extent of the economic downturn and which industries are most affected. Central bank economists typically focus on addressing the root causes of economic downturns rather than correcting cyclical unemployment.
With high cyclical unemployment, we are in a situation of imbalance. And when the economy is in disequilibrium, it will eventually return to equilibrium.. As this happens, the price level will change, and a change in the price level will lead to inflation. Thus, inflation will accelerate to equilibrium.
Thus, since frictional and structural unemployment will always exist, there will always be a natural rate of unemployment.
conclusions
A long-term stable unemployment rate that is characterized by a stable healthy change wages and inflation. Attempts to shift the economy to a lower unemployment rate (than its natural rate) through fiscal policy or easing monetary policy turn out to be unsuccessful, as market expectations from this kind of stimulation will lead to an acceleration of inflation and the growth rate of wages. Excessively high inflation is unprofitable Central Bank. Therefore, subsequently, the regulator will have to take inflation under control by tightening monetary policy or reducing public spending, which will bring the unemployment rate back to its previous natural rate.
The natural rate of unemployment may change in response to changes in the structure of the labor force. On a graph, the natural rate of unemployment is usually marked by a vertical Phillips curve.
Population= Labor force + Not labor force
Not labor force: children under 16; persons serving sentences in prisons; people in psychiatric hospitals and people with disabilities, people who do not want or cannot work and are not looking for work, full-time students; retired; housewives; vagabonds; people who have stopped looking for work Labor force = Employed + Unemployed
L=E+U
Cyclical unemployment associated with the rise and fall of production.
Structural unemployment caused by a mismatch between the structure of demand and supply of labor.
frictional unemployment associated with the voluntary transfer of workers from one job to another.
The frictional unemployed include:
1) dismissed from work by order of the administration;
2) resigned of their own free will;
3) awaiting reinstatement in their previous jobs;
4) those who have found a job, but have not yet started it;
5) seasonal workers (out of season);
6) people who first appeared on the labor market and have the level required in the economy vocational training and qualifications.
Actual unemployment rate
Frictional Unemployment Rate = FB / L
Structural Unemployment Rate = SAT/L
Natural Unemployment Rate = FB + SSB
Natural Unemployment Rate = Frictional Unemployment Rate + Structural Unemployment Rate
There are 146,000 unemployed in country A. The employment rate is 90%. This month, 50,000 people were fired, of which 10,000 decided not to look for work yet. In the same month, 100 thousand people were demobilized from the ranks of the country's Armed Forces. conscripts. Of these, 30 thousand decided to enter higher educational establishments, 40 thousand - to find a job, and the rest - to rest a bit and think about the future. How and how much has the unemployment rate changed in a given month?
Unemployment rate 10% (100 - 90).
The level of the working-age population: L = 146 / 0.1 = 1460 thousand people
The unemployed are people who are not working but looking for a job.
U1 = 50 - 10 = 40 (structural unemployment)
U2 = 40 - from among the military who decided to look for a job (frictional unemployment)
U = 40 + 40 = 80 thousand
| Year | Unemployed, thousand people | Number of economically active population, thousand people | Unemployment rate, % |
| 2000 | 7699.5 | 72770.0 | 10.6 |
| 2001 | 6423.7 | 71546.6 | 9.0 |
| 2002 | 5698.3 | 72357.1 | 7.9 |
| 2003 | 5933.5 | 72273.0 | 8.2 |
| 2004 | 5666.0 | 72984.7 | 7.8 |
| 2005 | 5242.0 | 73581.0 | 7.1 |
| 2006 | 5250.2 | 74418.9 | 7.1 |
| 2007 | 4518.6 | 75288.9 | 6.0 |
| 2008 | 4697.0 | 75700.1 | 6.2 |
| 2009 | 6283.7 | 75694.2 | 8.3 |
| 2010 | 5544.2 | 75477.9 | 7.3 |
| 2011 | 4922.4 | 75779.0 | 6.5 |
| 2012 | 4130.7 | 75676.1 | 5.5 |
| 2013 | 4137.4 | 75528.9 | 5.5 |
| 2014 | 3889.4 | 75428.4 | 5.2 |
| 2015 | 4100 | 75500 | 5.8 |
| 2016 | 4200 | 76600 | 5.5 |
| 2017 | 4000 | 72100 | 5.2 |
| 2018 |
American economist Arthur Okun formulated the law: the excess of the actual unemployment rate by 1% of its natural level leads to a lag in the volume of actual GNP from the potential (at full employment) GNP - by 2.5% (Oaken's coefficient).
GNP deficit= Real unemployment rate - natural unemployment rate
GNP Deficit = Actual Unemployment - Natural Unemployment
Real GNP in this year was equal to V. Potential GNP is equal to V". The actual unemployment rate was u%. Find the approximate value of the natural unemployment rate if the Okun coefficient is equal to k = 2.5.
Okun's Law:(V-V")/V = -k(u-u")
where
V* - potential GNP;
V - real GNP;
u* - natural unemployment;
u - actual unemployment;
k - Okun's coefficient.
Unemployment is a widespread phenomenon. There is not a single place in the world where this phenomenon does not occur.
It affects all spheres of human life, provoking changes in production.
The calculation of the unemployment rate is carried out by analyzing the ratio of the number of citizens who are unable to get a job, while being able to work, to the number of employed persons. Within the Russian Federation, the number of unemployed, since 2014, has been steadily growing.
The economic development of the country, in part, is expressed in the unemployment rate. She is a social economic phenomenon, at which active part of the population cannot find a job, is recognized, as it were, as “superfluous”, among the main labor mass.
The International Labor Organization has defined the unemployed. Thus, a person who does not have a permanent job is recognized as unemployed, is in search of work and can readily start it. It is very important that this person was officially registered in the unemployment fund.
It is noteworthy that the number of unemployed in each of the periods varies depending on the change in the cycle and the pace economic growth, on how much the labor productivity indicator has increased or decreased, as well as on the level of the vocational-skilled structure and the demand for labor.
Evaluation of indicators, which exert an influencing pressure on the unemployment rate, is produced by:
The first coefficient determines the specific number of the adult population that is directly employed in the production process on a national scale. The second indicator is the number of unemployed as a percentage of the number of workers. The last indicator is the percentage ratio between the unemployed and the workers at the moment of economic prosperity.
It is important to understand that the rate of unemployment or its rate, may change constantly due to the influence of production. Depending on the cycle, namely, the growth or recession of the economy and the volatility of production, technical progress, depending on the qualifications of employees, the professionalism of hired personnel. If the trend of the unemployment rate falls down, then there is an expansion and rise in production, otherwise, there is an increase in the indicator. Moreover, the dynamics of GNP and unemployment are inextricably linked.
Unemployment can considered in these aspects:
At forced or voluntary unemployment, as a rule, the worker himself seeks to work at a certain level of wages and certain conditions, but cannot get a job. Or the employee does not want to work on conditions of low wages (voluntary unemployment). The second option tends to increase during an economic boom, or vice versa - it decreases during its recession. The scale and duration of this type of unemployment depend on the professionalism and qualifications of workers, on the socio-demographic group of the population.
At registered unemployment part of the unemployed population is looking for work and is registered with the employment fund.
marginal unemployment characterized by the lack of work among the weakly protected segment of the population and in the social lower classes.
At unstable varieties of unemployment, the decisive factor will be a temporary problem associated with stopping the growth of production.
Hidden the type of unemployment is not officially recognized unemployment, but seasonal, one that occurs only in certain sectors of the economy, as workers are needed in such production.
There is also technological unemployment, which is caused by the adjustment of the production process through the use of the mechanism. With this type of unemployment, as a rule, productivity increases there, but less costs are required to improve the skills of employees.
There is a type of unemployment institutional
. This type can be characterized as a combination of trade union or state intervention in the establishment of wages, which should be formed on the basis of market demand.
Unemployment may occur Consequently:
The emergence of such a socio-economic condition as unemployment inevitably entails such effects:
The first case entails:
Non-economic changes mean an increase in the criminal situation in the country, an increase in stress in society, as well as provoking social and political unrest.
, according to the methodology of the International Labor Organization, the unemployment rate is calculated by dividing the number of unemployed by the number of the active population.
Statistical observation is based on a thorough analysis of the dynamics of the indicator over the years and months. Statistical observation has confirmed official data. The basis of these data is the published information of Rosgosstat.
As of January 2019, the number of unemployed in the country amounted to about 800 thousand people. At the same time, the Ministry of Labor and Social Protection of the Russian Federation predicts that the number of officially unemployed in 2019 will grow by almost 40% and reach 1.1 million Russians.
If we consider the situation in individual regions, it should be noted that in Moscow lowest unemployment rate- 1.3%, relative to Ingushetia, in which the figure was 26.2%.
Estimated unemployment rate on years allows us to say that since 2011 the indicator has become lower. So, at the beginning of 2011, this level was fixed at a value of 7.8%. In 2014 and 2015, the unemployment rate tended to rise due to massive layoffs.
Starting from the last months of 2013, in the first half of 2014, the unemployment rate stubbornly held on to one place, then a gradual decrease in the unemployment rate began until mid-summer 2014. By the end of 2014, the unemployment rate began to reach 5.3%, by 2015 this level was fixed at 5.8%.
On average, the unemployment rate in Russia has been gradually decreasing since 2011. So at the beginning of 2000, the indicator was 10.6%, then by 2001 it dropped to 9%, the following years it had the following expression - 2002 - 7.9%, 2003 - 8.2%, 2004 - 7.8%, 2005 - 7.1%, 2006 - 7.1%, from 2007 to 2008 the unemployment rate fell to 6%, in 2009-2010 - the level was 8.2%, and since 2011 the level has gradually decreased.
Statistics for this indicator are presented in the following video:
With the development of an economic phenomenon that involves the preservation of the workplace for a specific person, while maintaining formal relationships with the employer, but not giving him the opportunity to actually be employed in production, there appears hidden unemployment. As a rule, it occurs in times of crisis, when the actual labor force is not a necessity.
As a rule, the hidden unemployment rate does not exceed the range of 7 to 10 million people. This indicator tends to steadily increase.
Citizens who are actually faced with such an economic phenomenon can take advantage of receiving assistance from the state emergency service, have the right to take part in certain types of work, receive material assistance in the form of unemployment benefits, and so on.
During the crisis, during the growing number of unemployed, IT programming employees are valued more than ever. It is important to note that this particular field of activity is in demand at all times, since the development of technical progress and design different systems valuable not only in the vastness of the country, but throughout the world.
Developers based on Android and iOS are no less popular. Following them in popularity are specialists in the field of transport logistics, car service, middle managers in sales, cashiers and workers. Among the latter are loaders, nurses, turners and farmers, postmen. Among the professions that are becoming unclaimed, as a rule, accountants, cooks, drivers and property managers are singled out.
Theories of the development of unemployment There are many, but they can be summarized in three main ones:
Regardless of the reason for the appearance, the very essence of unemployment is a disaster, since the country, in macroeconomic terms, bears a huge burden, both economic and social. In addition to the fact that the instability of the population of the psychological and social aspects is developing, there are problems of a political nature. Because the people want constructive solutions and action by the government. Moreover, without having a permanent and stable source of income, a person resorts to breaking the law. This means that social tension is increasing, the crime situation is increasing, and so on. The country receives less GDP production.
FROM unemployment can only be fought in a complex by taking a variety of measures. In particular:
The rules for calculating the unemployment rate are set out in the following video:
One of the most acute and negative socio-economic phenomena - unemployment. A situation in which a significant part of the working-age population is looking for, but cannot find, a job is fraught with a number of serious consequences. In political and socially, this is a great stress for society, leading to an increase in discontent among the people. From the point of view of the economy, unemployment speaks of inefficient and incomplete use of labor and production resources. But with all this, it is impossible to completely get rid of unemployment, some natural level of unemployment will always remain.
(unemployment) - the presence in the country of a part of the economically active population that is willing and able to work, but cannot find work.
Economically active population - residents of the country who have an independent source of livelihood, or desire and potentially can have it.
Synonymous with the concept of the economically active population is the term - work force (labor power).
Unemployed- a person aged 10-72 years, according to the ILO definition (in Russia, aged 15-72 years according to the methodology of Rosstat), who, as of the date of the study:
One of the most important indicators characterizing the phenomenon of unemployment is its level and duration.
Unemployment rate- the share of unemployed in the total number of economically active population of a certain age group.
where: u – unemployment rate;
U is the number of unemployed;
L is the economically active population.
An important concept is the natural rate of unemployment, "natural" because even under the most favorable economic conditions there will be a small, but a certain percentage of the unemployed. These are people who can, but do not want to work (for example, they have profitable investment and they live on interest, how early).
Natural rate of unemployment- the unemployment rate at full employment of the labor force.
That is, this is the percentage of unemployed in a situation where everyone who wants to work can find a job. This can be achieved with the most rational and effective use work force.
Full employment of the economically active population implies the existence of only structural and frictional unemployment in the country. Therefore, the natural rate of unemployment can be calculated as their sum:
where: u * – natural unemployment rate;
u Fritz. – the level of frictional unemployment;
u struct. – the level of structural unemployment;
U Fritz – the number of frictional unemployed;
U struct. – the number of structural unemployed;
L is the labor force (economically active population).
Duration of unemployment- the period during which a person is looking for and cannot find a job (that is, he is unemployed).
The following are the most important forms of unemployment :
1. Friction- Unemployment due to the voluntary search for a new better job by an employee.
In this case, the employee deliberately quits his previous job and looks for another, with more attractive working conditions for him.
2. Structural- Unemployment caused by changes in the structure of demand for labor, as a result of which there is a discrepancy between the requirements for applicants for vacant jobs and the qualifications of the unemployed.
The causes of structural unemployment can be: the elimination of obsolete professions, changes in production technology, a large-scale restructuring of the entire economic system states.
There are two types of structural unemployment:
3. Cyclic- unemployment caused by a decline in production during the corresponding
In addition, there are other types of unemployment :
a) voluntary- caused by the unwillingness of people to work, for example, with a decrease in wages.
b) forced(waiting unemployment) - occurs when people are able and willing to work at a given level of wages, but they cannot find work.Voluntary unemployment is especially high during the phase of the economic peak or boom. When the economy is in recession, its level decreases.
c) seasonal- unemployment characteristic of some sectors of the economy, where the need for labor depends on the time of year (season).The reason for involuntary unemployment, for example, may be the inflexibility of the labor market in relation to wages (the struggle of trade unions for high wages, the establishment of a minimum wage by the state). Some workers are ready to work for a small salary, but the employer simply cannot arrange them under such conditions. Therefore, he will hire fewer workers, more skilled and at higher wages.
For example, in the agricultural industry during sowing or harvesting.
d) technological- unemployment caused by mechanization and automation of production, as a result of which the productivity of the ore increases dramatically and fewer jobs are required with more high level qualifications.
e) registered- Unemployment characterizing the unemployed economically active population, officially registered in this capacity.
e) hidden- Unemployment, actually existing, but not officially recognized.
An example of hidden unemployment can be the presence of persons who are formally employed, but actually not working (during a recession, many production capacity idle and the workforce is not fully utilized). Or it can be people who want to work, but are not registered at the labor exchange.
g) marginal- Unemployment of the vulnerable social strata(women, youth, people with disabilities).
h) unstable temporary unemployment.
For example, layoffs in seasonal sectors of the economy after the end of the “hot” season or people voluntarily changing their jobs.
i) institutional- Unemployment provoked by the intervention of trade unions or the state in the establishment of wages, which as a result becomes different from what could be formed in a natural way.
There are many factors that can trigger an increase in unemployment. The following main causes of unemployment:
1. Structural improvements in the economy- the emergence and introduction of new technologies and equipment can lead to a reduction in jobs (machines "force out" a person).
2. Seasonal fluctuations- temporary changes in the level of production and provision of services (and, accordingly, the number of jobs) in certain industries.
3. Cyclical economy- during a recession or crisis, the need for resources, including labor, decreases.
4. Demographic changes - in particular, the growth of the working-age population can lead to the fact that the demand for jobs will grow faster than their supply, which will lead to unemployment.
5. Wage policy– measures of the state, trade unions or company management to increase minimum size wages can lead to an increase in production costs and a decrease in the need for labor.
The situation where the working-age population cannot find work is not harmless, and there may be serious consequences of unemployment
1. Economic impact:
Okun's law Show
Okun's law (Okun's law) is named after the American economist Arthur Melvin Okun.
It says: the excess of the unemployment rate over the natural unemployment rate by 1% causes a decrease in real GDP relative to the level of potential GDP by 2.5% (derived for the United States in the 1960s; today, numerical values may be different for other countries).
where: Y - actual GDP;
Y * - potential GDP,
u cycle. - the level of cyclical unemployment;
β is an empirical sensitivity factor (usually 2.5 is taken). Each economy (country), depending on the period, will have its own value of the coefficient β.
2. Non-economic consequences:
Galyautdinov R.R.
© Copying material is allowed only if you specify a direct hyperlink to
Often on TV we hear news about an increase or decrease in unemployment in a particular country or city. But does each of us understand what is meant? After all, the real state of affairs can be understood only by correctly realizing the significance of such an indicator as the calculation formula given below will contribute to a better understanding of the issue.
Like it or not, but in any state there is a certain percentage of people who do not have a job at the moment. Even in the richest countries there is unemployment. There are a number of reasons for this.
Any most developed country and the economies of the world find a place for unemployment. Perhaps only with the idea of capitalism did the Soviet people believe that in the near future everyone would have a job and goods in stores would no longer be sold for money.
Unemployment can be due to a number of reasons. They can be divided into several groups:
Economic;
political;
Social;
Personal.
The economic group of reasons can include those that are associated with the specifics of the development of the economy of a particular region (country). If the production capacity of the state is at zero, the economy is collapsing, enterprises stop, then it is natural that full employment of the population is out of the question. In this case, people simply have nowhere to work.
Political reasons are based on any government measures to regulate a particular sector of the economy. Sometimes politicians, when solving international issues, forget that they influence the lives of citizens within the country. Someone gets a job because of this, and someone loses.
The social group includes the causes of unemployment, independent of the economic or political vector of development. They are more influenced by prestige and fashion. For example, there may be 1,000 vacancies for the position of a cleaner, but because of their beliefs about the possibility of finding a more prestigious and better job, people remain unemployed at the moment.
The personal group of causes includes those that are associated with the individual qualities of people. After all, there are those who do not want to work at all, live on welfare, use alcoholic beverages and drugs, and it is simply impossible to force them to do anything for society in the existing legal field.
To calculate the correct statistics for unemployed people, a special unemployment formula is used. The unemployment rate, which can be calculated using it, determines the degree of unemployment of the economically active population. We will consider it further.
The following should also be noted. You can calculate the unemployment rate in different ways. The calculation formula in each method will be different. But mostly in statistics they use the unemployment rate
It is determined by the ratio of the total number of unemployed to the number of economically active population.
The unemployed are part of the labor force that can be employed in the production of goods or services, but for some reason are not involved in these processes.
Structural.
Friction.
Seasonal.
Its calculation formula is as follows:
Be \u003d Bstr + Bfr.
What does this indicator say? It is calculated when they want to know what the overall unemployment rate will be if the condition of full employment is met.
That is, if everyone who wanted could find a job. Accordingly, it can be seen that the formula of which is given above assumes the presence in the economy of only structural and frictional types of unemployment.
We can say that this indicator shows the situation that has developed in the labor market in ideal conditions when the entire economically active population is employed in the production of goods or services.
Another main indicator is actual unemployment. It is calculated as the sum of all types of unemployment listed above, with the exception of natural. That is, the sum of structural, frictional, seasonal and cyclic - this will be the actual unemployment. The formula looks like this:
Bf \u003d Bstr + Bfr + Bs + Bts.
Actual unemployment essentially reflects the real state of affairs in the labor market. It can be greater than, equal to, or less than the natural rate of unemployment. The calculation formula shows that this indicator affects absolutely all types of unemployment, which means:
The actual level will be higher than natural unemployment if the economy is experiencing a slowdown in development.
The situation will be inversely proportional to the first if the economy picks up pace and jobs appear faster than people are being fired from their old jobs.
In fact, with a full understanding of the causes, types and factors, the unemployment calculation formula helps to give a real assessment of the employment of the population and the work of the government to provide decent jobs.
The unemployment rate has always characterized the state of the economy, and thanks to this indicator, one can draw a conclusion about where to strive further and what needs to be corrected in the economic vector of development.
