Resumo de Natural Rate Of Unemployment

Title: Natural Rate of Unemployment
To understand what factors affect unemployment it is necessary to think about the following relationship: When national income changes, the volume of employment and that of unemployment change as well. Unemployment follows a cyclical path, rising during periods of recession and falling in periods of business expansion. The unemployment rate does not, however, show any significant long-term trend over rime.
In macroeconomics, scholars distinguish between the natural rate of unemployment made up by frictional and structural unemployment and the rate of cyclical unemployment. The unemployed are those who are without jobs and are actively searching for jobs. The unemployed are often measured as numbers of persons and sometimes as rates, expressed as percentages of the total labor force (Mishkin, 1995).
Over the decades, the economy has generated a net increase in new jobs fast enough to employ the rising number of potential workers. As a result the unemployment rate?which is the difference between the labor force and employment, expressed as a percentage of the labor force?has not risen decade by decade. The unemployment rate does fluctuate from year to year, because changes in the labor force are not exactly matched by changes in employment. On the supply side, the labor force has expanded virtually every year since the end of the Second World War in 1945. The causes have included a rising population, which causes increased entry into the labor force of people born in Europe 15 to 25 years previously; increased labor force participation by various groups, especially women; and immigration of working-age persons (Snowdon et al, 1994). On the demand side, many existing jobs are destroyed every year, and many new jobs are created. Economic growth causes some sectors of the economy to decline and others to expand. Jobs are lost in the sectors that are contracting. Jobs are created in the expanding sectors. Additionally, even in stable industries, many firms die and many new firms are born. The net increase in employment is the difference between all the jobs that are lost and all those that are created. In most years, enough new jobs have been created both to replace the old jobs that are destroyed and to provide jobs for the increased numbers in the labor force. The result has been a net increase in employment in almost all years.
During the early 1980s, worldwide unemployment rose to high levels. The unemployment rate remained high in many advanced industrial countries and only began to come down, and then very slowly, during the latter half of the decade.
For purposes of study, the unemployed are classified in various ways. They can be grouped by personal characteristics, such as age, sex, degree of skill or education, or ethnic group. They can also be classified by geographical location, by occupation, by the duration of unemployment, or by the reasons for their unemployment. Interestingly enough, the recorded figures for unemployment may significantly understate or overstate the numbers who are actually willing to work at the existing set of wage rates. Normally, overstatement arises because the measured figure for unemployment includes people who are not interested in work but who say they are unemployed in order to collect unemployment benefits. Also, understatement arises because people who would like to work but have ceased to believe that suitable jobs are available voluntarily withdraw from the labor force (Snowdon et al, 1994). Although these people are not measured in the survey of unemployment (which requires that people actively look for work), they are unemployed in the sense that they would accept a job if one were available at going wage rates. People in this category are referred to as discouraged workers. They have voluntarily withdrawn from the labor market, not because they do not want to work, but because they believe that they cannot find a job given current labor market conditions.
Generally, economists distinguish three types of unemployment: cyclical, frictional and structural. It is important to mention that a certain combination of frictional and structural unemployment exists even when the national income is at its potential. Together, these two types of unemployment make up natural rate of unemployment.

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