Macroeconomics

Measurement
Part1: Prices and Unemployment
Division of U.S. Population
Unemployment

Employment rate is the percentage of the civilian noninstitutional population

that is employed. LFPR is the percentage of the civilian noninstitutional
population that is in the civilian labour force.
Reasons for unemployment
 Job Loser: This person who employed in the civilian labour
force and was either fired or laid off. Most unemployed person
fall into this category.

 Job Leaver: This person was employed in the civilian labour

force and quit the job.

 Reentrant: This person who previously employed, hasn’t

worked for some time, and is currently reentering the labour
force.

 New Entrant: This person has never held a full-time job for
two weeks or longer and is now in the civilian labour force
looking for a job.
Current Status of Employment
in Nepal
 Employment Rate: 68%
 ILO estimate in 2017 as Employment rate by sector:
Agriculture (72.7%), Services (16.4%) and Industry
(10.9%)
Source: nepalindata.com
Types of Unemployment Cont..

 Frictional Unemployment: Unemployment caused by

changing market conditions and represented by qualified
individuals with transferable skills who change jobs. It is
due to imperfect or incomplete information. It is the
situation in which people are looking for new or better job
and employers are looking for right workers.
 Structural Unemployment: Unemployment occur due to
change in the structure of the economy that eliminate
some jobs and create others for which the unemployed
are unqualified. It is largely the consequence of
automation (labor-saving devices) and long-lasting shifts
in demand.
 Seasonal Unemployment: It is a situation in which people
are out of work and looking for a job during off-season.
Types of Unemployment Cont..

 Natural Unemployment: Adding the frictional and

structural unemployment is natural unemployment.
 Cyclical Unemployment: The difference between the
existing unemployment rate and the natural
unemployment rate is cyclical unemployment. It is
caused due to operation of trade cycle or business cycle.
 Disguised Unemployment: It is a situation in which a
person seems as employed but infact he is not
employed. As too many persons are involved in a work
or persons are more than actually required. It is also
called hidden unemployment.
Questions
 How does structural unemployment differ from
frictional unemployment?
 If the unemployment rate is 4 percent, it does not
follow that the employment rate is 96 percent.
Explain why.
 If the price of, say, oranges has risen, does it follow
that the price level has risen too? Explain your
answer.
 Explain how the CPI is computed.
 http://therisingnepal.org.np/news/2032