Samuel Lunt - Induction Essay

According to the ILO “Unemployment” is based on certain criteria being met simulta-
neously:
“The 'unemployed' comprise all persons within the age limits specified who were:
(a) 'without work' – were not in paid employment or self-employment;
(b) 'currently available for work' – were available for paid employment or self-em-
ployment; and
(c) 'seeking work' – had taken specific steps to seek paid employment or self-employ-
ment.)” International Labour Office (2003).
The ILO (2003) further sub-categorised unemployment into:
1. Cyclical unemployment where people become unemployed due to a lack of demand
for goods or services.
2. Structural Unemployment – where the jobs on offer are mismatched to the employ-
able.
3. Frictional Unemployment – those transitioning between different jobs.
4. Long-term unemployment – those unemployed for longer than six months.
5. Specific Unemployment – referring to particular cohorts in a population.

From the above graph, it can be seen that apart from significantly higher rates of un-
employment in 1982 and 2009, unemployment rates in the US have remained largely
stable. The Bureau of Labor Statistics (as cited by CEIC, 2020) shows that over this
time period the average was 5.6%. These figures were upended in 2020 when the US
fell victim to the global pandemic of COVID-19.
In order to reduce the spread of COVID, stay-at-home orders were issued, affecting
millions of workers. This had a devastating economic effect: businesses in almost ev-
ery sector laid off workers. In Keynesian terms, this was due to a lack of demand for
goods and services. Nicola et al (2020) show that the need for certain commodities
decreased, leading to cyclical unemployment, whilst particular industries struggled
with overwhelming levels of demand.
Okun’s law shows a negative correlation between the levels of unemployment, and
real GDP growth - indeed, the US has seen record low GDP growth since the pan-
demic struck. Beland et al (2020) show that these impacts were felt disproportionately
by particular cohorts and in places where lockdown orders were more severe. Despite
fiscal stimulus packages, it is thought that high rates of unemployment (over 10%)
could linger even through 2021 (Petrosky-Nadeau et al, 2020).

References

Beland, Louis-Philippe; Brodeur, Abel; Wright, Taylor (2020). COVID-19, Stay-at-

Home Orders and Employment: Evidence from CPS Data
Carleton University, Department of Economics, Carleton Economic Papers: 20-04

Bureau of Labor Statistics, 2020. As cited by CEIC Data. https://www.ceicdata.com/

en/indicator/united-states/unemployment-rate

International Labour Organization. 2003. International training compendium on

labour statistics, Module 1 – Statistics of employment, unemployment, underemploy-
ment: economically active population (Geneva, ILO Bureau of Statistics, Policy Inte-
gration Department).

Maria Nicola, Zaid Alsafi, Catrin Sohrabi, Ahmed Kerwan, Ahmed Al-Jabir, Christos
Iosifidis, Maliha Agha, Riaz Agha - The socio-economic implications of the coron-
avirus pandemic (COVID-19): A review - International Journal of Surgery, Volume
78, (June 2020)

Petrosky-Nadeau, Nicolas; Valletta, Robert G (2020) Unemployment Paths in a Pan-

demic Economy. Federal Reserve Bank of San Francisco, Working Paper Series:
2020-18