Econ2000: Labour Market and Phillips Curve

Unemployment & Labour Market Dynamics
Population = institutional + noninstitutional civilian population (CP)




Labour force = employed + unemployed
Out of labour force = discouraged + students + retired + disabled + able to work but don't want to


𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒
𝑃𝑎𝑟𝑡𝑖𝑐𝑖𝑝𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 =
𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛

𝑢𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑑
𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑟𝑎𝑡𝑒 =
𝑙𝑎𝑏𝑜𝑢𝑟 𝑓𝑜𝑟𝑐𝑒

!"#$%&!'
Employment or absorption rate = (%)*+,- /-! #%#0$/1+%,

#𝑒𝑝𝑙𝑜𝑦𝑒𝑑 𝑙𝑒𝑎𝑣𝑖𝑛𝑔 𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 +
!"#$%&'(#)*)+,-'!./0#) 𝑆𝑒𝑝𝑎𝑟𝑎𝑡𝑖𝑜𝑛 𝑟𝑎𝑡𝑒 =
Broader unemployment rate = #𝑒𝑚
&/1'!. 3'.-#*)+,-'!./0#)




Labour Market Flows

• Refers to movements of individuals between different states in the labour market over time.
• Instead of just looking at static measures like the unemployment rate or employment level at a given moment