ECON 100 Lecture 20 Monday, April 21

Midterm Exam #2 is on Friday, May 16.

Unemployment

This is Michael Dixon, an experienced software test engineer.

As of June 2012, he hasn't had a job since September 2011.

Living at a friend's house without paying rent, he spends all day searching online for job opportunities, fearing that if he stops to watch TV, he'll miss something.

"It's kind of like a feeling of 'I can't believe this is happening to me,' and a sense of hopelessness," said Dixon, a 38-year-old Seattle resident. "You really, really, truly start to question who you are."

Describing Unemployment Three Basic Questions How does government measure the economy’s rate of unemployment? What problems arise in interpreting the unemployment data? How long are the unemployed typically without work?

Labor Force Statistics Produced by Türkiye İstatistik Kurumu (TÜİK) Regular surveys of households, interviews with “adult population” (15 years or older). Most current report is issued on April 15 2014 Örnek hanehalklarında yaşayan 15 ve daha yukarı yaştaki toplam 95 bin 578 fert ile görüşülmüştür.

Labor Force Statistics The adult population is divided into 3 groups: employed: paid employees, self-employed, and unpaid workers in a family business. unemployed: people are not working now but have looked for work during previous 3 months. (4 weeks in Europe and US) not in the labor force: everyone else in the adult population. Labor force is 1 + 2: It is the sum of the employed and unemployed workers. (Labor force = employed + job searchers).

The two very important statistics are The unemployment rate (u-rate) The labor force participation rate (LFPR)

Labor Force Statistics Unemployment rate (the “u-rate”): % of the labor force that is unemployed u-rate # of unemployed labor force = 100 x Labor force participation rate: % of the adult population that is in the labor force labor force participation rate labor force adult population = 100 x Labor force = the sum of the employed and unemployed workers. (Labor force = employed + job searchers) .

Recent unemployment figures Jan 2014

TUIK, Hanehalkı İşgücü İstatistikleri, Ocak 2014 (u-rate) İşsizlik oranı %10,1 seviyesinde gerçekleşti Türkiye genelinde işsiz sayısı 2014 yılı Ocak döneminde geçen yılın aynı dönemine göre 49 bin kişi azalarak 2 milyon 841 bin kişi olarak gerçekleşti. İşsizlik oranı ise 0,5 puanlık azalış ile %10,1 seviyesinde gerçekleşti. (LFPT) İşgücüne katılma oranı %50 olarak gerçekleşti

Labor Force Statistics Turkey 2014 0. Adult population 56,084,000 Employed 25,194,000 Unemployed 2,841,000 Labor force 28,036,000

The breakdown of the adult population in 2014 Employed (25.2 million) Adult Population (56.1 million) Labour Force (28 million) Unemployed (2.8 million) Not in the labor force (28 million)

The important definitions, one more time Self-test The important definitions, one more time

The unemployment rate is computed as the number of individuals seeking work divided by the number of employed individuals. the number of employed individuals minus the number of individuals seeking work. the number of individuals seeking work divided by the total population. the fraction of those individuals seeking work who fail to find a job in a certain time period. the number of individuals seeking work divided by the sum of employed individuals and those seeking work.

The labor force participation rate is calculated as the number of individuals seeking work divided by the number employed. the fraction of the working age population that is employed. the fraction of the labor force that is seeking work. the fraction of the working age population that is employed or seeking work. the fraction of the working age population that is seeking work.

These are the 2012 figures (Turkey) Please compute the unemployment rate and the labor force participation rate. Employed 24,760,000 Unemployed 2,790,000 Adult population 55,162,000

Unemployment rate, 2013 - 2014

Unemployment rate 1988 – 2012

Labor force participation rates in Turkey

Labor force participation, Turkey, 1988-2006 Year LFPR Agriculture

Labor force participation rates, selected countries, 2005

TUIK definitions employment

EMPLOYED (İSTİHDAM): İşbaşında olanlar ve işbaşında olmayanlar grubuna dahil olan kurumsal olmayan çalışma çağındaki nüfus, istihdam edilen nüfustur. İşbaşında olanlar: Ücretli, maaşlı, yevmiyeli, kendi hesabına, işveren ya da ücretsiz aile işçisi olarak referans dönemi içinde en az bir saat bir iktisadi faaliyette bulunan kişilerdir. What is “kurumsal olmayan çalışma çağındaki nüfus”? What is “referans dönemi”?

KURUMSAL OLMAYAN NÜFUS: Üniversite yurtları, yetiştirme yurtları (yetimhane), huzurevi, özel nitelikteki hastane, hapishane, kışla vb. yerlerde ikamet edenler dışında kalan nüfustur. KURUMSAL OLMAYAN ÇALIŞMA ÇAĞINDAKİ NÜFUS: Kurumsal olmayan nüfus içerisindeki 15 ve daha yukarı yaştaki nüfustur.

Referans dönemi

İSTİHDAM: İşbaşında olmayan ama istihdam edilmiş kabul edilenler. İşbaşında olmayanlar: İşi ile bağlantısı devam ettiği halde, referans haftası içinde çeşitli nedenlerle işinin başında olmayan kendi hesabına ve işverenler istihdamda kabul edilmektedir. Ücretli ve maaşlı çalışan ve çeşitli nedenlerle referans döneminde işlerinin başında bulunmayan fertler; ancak 3 ay içinde işlerinin başına geri döneceklerse veya işten uzak kaldıkları süre zarfında maaş veya ücretlerinin en az % 50 ve daha fazlasını almaya devam ediyorlarsa istihdamda kabul edilmektedir

İSTİHDAM: son olarak… Üretici kooperatifi üyeleri ile mesleki bilgilerini artırmak amacıyla belirli bir menfaat (ayni ya da nakdi gelir, sosyal güvence, yol parası, cep harçlığı vb.) karşılığında çalışanlar (çırak, stajyer vb.) istihdamda kabul edilmektedirler.

Definition of Unemployed İŞSİZ: Referans dönemi içinde istihdam halinde olmayan kişilerden iş aramak için son üç ay içinde iş arama kanallarından en az birini kullanmış ve 2 hafta içinde işbaşı yapabilecek durumda olan kurumsal olmayan çalışma çağındaki tüm kişiler işsiz nüfusa dahildirler. Üç ay içinde başlayabileceği bir iş bulmuş ya da kendi işini kurmuş ancak işe başlamak ya da işbaşı yapmak için çeşitli eksikliklerini tamamlamak amacıyla bekleyenler de işsiz nüfus kapsamına dahildirler

Unemployment in Europe, 1970–2011

France

UK

Unemployment in Europe, 1970–2011

Unemployment in the U.S. 1960–2012

Problem 2 (from SPS #7) The Bureau of Labor Statistics announced that in January 2006 of all adult Americans 142 millions were employed, 7,5 millions were unemployed, and 76,5 millions were not in the labor force. Use this information to calculate the adult population the labor force the labor force participation rate the unemployment rate

End of PART I

What does the unemployment rate really measure?

What does the unemployment rate really measure? It is difficult to distinguish between a person who is unemployed and a person who is not in the labor force. Unemployed v. not in the labor force ???

What does the unemployment rate really measure? Discouraged workers These are people who want to work but have given up looking for jobs after an unsuccessful search. These people are not recorded in unemployment statistics.

How many are they?

İşgücüne dahil olmayanlar aşağıdaki gruplara ayrılmıştır İŞGÜCÜNE DAHİL OLMAYANLAR: İşşiz veya istihdamda bulunmayan kurumsal olmayan çalışma çağındaki nüfustur. İşgücüne dahil olmayanlar aşağıdaki gruplara ayrılmıştır 1. İş aramayıp çalışmaya hazır olanlar: Çeşitli nedenlerle bir iş aramayan, ancak 2 hafta içinde işbaşı yapmaya hazır olduğunu belirten kişilerdir. İki alt başlıkta ele alınmaktadır: İş bulma ümidi olmayanlar: Daha önce iş aradığı halde bulamayan veya kendi vasıflarına uygun bir iş bulabileceğine inanmadığı için iş aramayan ancak işbaşı yapmaya hazır olduğunu belirten kişilerdir. Diğer: Mevsimlik çalışma, ev kadını olma, öğrencilik, irad sahibi olma, emeklilik ve çalışamaz halde olma gibi nedenlerle iş aramayıp ancak işbaşı yapmaya hazır olduğunu belirten kişilerdir.

2. Mevsimlik çalışanlar: Mevsimlik çalışması nedeniyle iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir. 3. Ev işleriyle meşgul: Kendi evinde ev işleriyle meşgul olması nedeniyle iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir. 4. Eğitim/Öğretim: Bir öğrenim kurumuna devam etmesi nedeniyle iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir. 5. Emekli: Bir sosyal güvenlik kuruluşundan emekli olduğu için iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir. 6. Çalışamaz halde: Bedensel özür, hastalık veya yaşlılık nedeniyle iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir. 7. Diğer: Ailevi ve kişisel nedenler ve bunun dışındaki diğer nedenler ile iş aramayan ve iş başı yapmaya da hazır olmayan kişilerdir.

Exercise In each of the following, what happens to the u-rate? Does the u-rate give an accurate impression of what’s happening in the labor market? A. Sue lost her job, and begins looking for a new one. B. Jon, a steelworker who has been out of work since his mill closed last year, becomes discouraged and gives up looking for work. C. Sam has three kids, his wife is not working. Sam just lost his $80,000 job as a research scientist. Immediately, he takes a part-time job at McDonald’s until he can find another job in his field. The objective of this exercise is to lead students to discover why the unemployment rate is not a perfect indicator of joblessness. 50

Answers A. Sue lost her job, and begins looking for a new one. A. Sue lost her job, and begins looking for a new one. u-rate rises A rising u-rate gives the impression that the labor market is worsening, and it is. 51

Answers B. Jon has been out of work since last year, becomes discouraged, stops looking for work. Discouraged workers would like to work but have given up looking for jobs classified as “not in the labor force” rather than “unemployed” u-rate falls, because Jon is no longer counted as unemployed. A falling u-rate gives the impression that the labor market is improving, but it is not. 52

Answers C. Sam lost his $80,000 job, and takes a part-time job at McDonald’s until he finds a better one. u-rate unchanged, because a person is “employed” whether they work full or part time. Things are worse, but the u-rate fails to show it. 53

Unemployment and socio-economic groups The United Kingdom

The Labour Market Experience of Different Groups Copyright©2010 South-Western

How long are the unemployed without work? Most spells/instances of unemployment are short. But … most unemployment observed at any given time is long-term. most of the economy’s unemployment problem comes from few workers who are jobless for long periods of time.

The U.S., Bureau of Labor Statistics March 2013

In Turkey

DURATION OF UNEMPLOYMENT BY YEARS AND SEX (Thousand person, 15+ age) unemployed F M Total

The human cost of unemployment Real people: The effect of unemployment

http://www. huffingtonpost http://www.huffingtonpost.com/robert-leahy-phd/unemployment-health_b_2616430.html Research suggests that being unemployed doubles a person's chance of a major depressive episode Unemployment is also highly associated with domestic violence and alcohol abuse.

http://www. huffingtonpost http://www.huffingtonpost.com/robert-leahy-phd/unemployment-health_b_2616430.html Men with children view unemployment as more a defeat than women with children.

Physical health may also suffer: new medical conditions such as hypertension and diabetes may follow the loss of a job.

Strains on intimate relationships might result from being unemployed, since frustration between partners can result from financial worries.

Feeling uncomfortable and embarrassed about their situations, some unemployed people isolate themselves socially and don't find enjoyment in the activities they once did. They may feel hopeless, confused or overwhelmed.

End of the lecture