Employment and

Unemployment
Macro 7
• One unemployed worker stated that ‘nothing stops the omnipresent
feeling of loneliness, worthlessness and desperation.’
• Long-term unemployment generates three simultaneous traumas:
1. a loss of income
2. a loss of skills
3. a loss of perceived self-worth.
Because of its enormous economic and social costs, policymakers try to
limit the amount of unemployment in an economy.
• The population of Potential Workers: it includes everyone with three
exceptions
1. children under 15
2. people on duty in the military
3. institutionalized people
 Potential
Workers

Not in the
Employed Unemployed
Labor Force
• Employed: those holding full time or part time paid jobs are officially classified as Employed.
• Unemployed: the unemployed comprises all persons 15 years of age and over who were not
employed during the reference period had used at least one active channel for seeking a job
during the last four weeks and were available to start work within two weeks.
Active job search channels are:
Contacted employers directly
Asked friends, relatives, etc. to find a job
Applied Turkish Employment Office (İŞKUR) to find a job
Applied or contacted private employment offices / human resources offices
Searched for a suitable job for newspapers, magazines, the internet or posted ads
Post or answer a job advertisement in the newspaper
Submitted or updated resume for job application online
Take an oral or written exam/interview to find a job
Made any preparations to start your own business
• Persons who have already found a job and will start to work within 3 months, or established
his/her own job but were waiting to complete necessary documents to start work were also
considered to be unemployed.
Not in the Labor Force: Includes persons 15 years of age and over who are neither unemployed nor employed. The persons
not in labor force consist of the following sub-groups;
  1. Not seeking a job, but available to start: These are the persons who did not look for a job with different reasons, but
were available for work within 2 weeks. This group consists of 2 sub-groups;

      Discouraged workers: These are the persons who were available to start a job but were not seeking because had looked
for before, but were not able to find or those believe that could not find a job with his/her qualifications. 

      Other: These were the persons who were not seeking a job for reasons such as being seasonal workers, busy with
household chores, student, property income earner, retired, or disabled, but available to start a job. 

  2. Seasonal workers: Persons were not seeking a job and were not available for work because of being seasonal workers.

  3. Household chores: Persons not seeking a job and were not available for work because of doing household chores.

  4. In education or training: Persons not seeking a job and were not available for work because of attending regular school
or training.

  5. Retired persons: Persons not seeking a job were not available for work because of being retired.

  6. Disabled, old or ill: Persons not seeking a job and were not available for work because of being disabled, ill or elderly.

  7. Other: Persons not seeking a job and were not available for work because of family or personal reasons or other
reasons. 
• Labor Force = Employed + Unemployed
• https://en.wikipedia.org/wiki/List_of_countries_by_employment_rate

• https://www.worlddata.info/unemployment-rates.php
• Economists refer to job-hunting activities as job search.
• Because each person has specific capabilities, experience, and job
preferences, finding the right match between an unemployed person and
a firm takes time.
• Search friction arise
- because of the time-consuming logistics of finding, applying, and
interviewing for jobs
- because firms and workers have imperfect information about each
other
- because the state of the economy.
• Unemployment resulting from imperfect information about jobs and
from the time-consuming process of job search is frictional
unemployment.
• Frictional unemployed persons are
- the youth who have joined labor force yet
- the ones who have quitted his job and searching for a new one.
It assumes normal in every country there are about %1-%3 frictional
unemployed people in labor force.
• Structural unemployment arises when the quantity of labor supplied
is greater than the quantity of labor demand.
• Structural unemployment arise
- with changes in the technologies in the economy. It arise when the
structure of the economy changing from labor-intense technologies to
capital-intense technologies.
- with changes in the consumer preferences. New pleasures and
preferences arise unemployment especially in traditional sector.
• Cyclical Unemployment: this kind of unemployment arise during the
recession period of a circle, and decrease during the boom period of
the circle.
• Seasonal Unemployment: The demand for labor can fluctuate
according to the seasons. In some sectors labor demand increases in
summer or in springs. When the demand goes down because of the
season the seasonal unemployment arise.
• Natural Rate of Unemployment: Is equal to the sum of frictional
unemployment and structural unemployment. It calculate about %3
in developed economies while about %6 in developing economies.