2. There is a tremendous amount of movement into and out of the labor force.
a. Many of the unemployed are new entrants or reentrants looking for work.
b. Many unemployment spells end with a person leaving the labor force as opposed to actually finding a job.
3. There may be individuals who are calling themselves unemployed to receive government assistance, yet they are not trying hard to find work. These individuals are more likely not a part of the true labor force, but they will be counted as unemployed.
4. Definition of Discouraged Workers: individuals who would like to work but have given up looking for a job.
a. These individuals will not be counted as part of the labor force.
b. Thus, while they are likely a part of the unemployed, they will not show up in the unemployment statistics.
F. How Long Are the Unemployed Without Work?
1. Another important variable that policymakers may be concerned with is the duration of unemployment.
2. Most spells of unemployment are short, and most unemployment observed at any given time is long term.
G. Why Are There Always People Unemployed?
1. In an ideal labor market, wages would adjust so that the quantity of labor supplied and the quantity of labor demanded would be equal.
2. However, there is always unemployment even when the economy is doing well. The unemployment rate is never zero; it fluctuates around the natural rate.
a. Definition of Frictional Unemployment: unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills.
b. Definition of Structural Unemployment: unemployment that results because the number of jobs available in some labor markets is insufficient for everyone who wants a job to get one.
c. Three possible reasons for structural unemployment are minimum-wage laws, unions, and efficiency wages.