1. Working age population and Others
2. In Labour Force and Not in Labour Force
3. Employed and Unemployed

1. Unemployment rate
2. Labour force participation rate

• Is the percentage of the people in the labour force who are unemployed
• Is an indicator of the extent to which people who want jobs but can't find them.

Unemployment Rate = # of people unemployed _{x 100}

                    Labour force

8%

What is the formula to calculate Labour Force Participation Rate?

Labour Force Participation Rate

=

       Labour Force _{X 100}

Working-age

population

• A person who does not have a job, is available and willing to work but has not made specific efforts to find a job with the previous four weeks
• The presence of Discouraged workers means that the measured unemployment rate underestimates the true amount of unemployment

1. Voluntary
2. Involuntary

• The number of involuntary part time workers as a percentage of the labour force

 Involuntary

 Part-time rate = # of Involuntary part-time workers _{X 100}

                                           Labour Force

• The total number of hours worked by all the people employed, both full time and part time during a year
• It measures the quantity of labour employed

1. Frictional
2. Structural
3. Seasonal
4. Cyclical

• The unemployment rate that arises from normal labour turnover - from people entering and leaving the labour force and from the ongoing creation and desctruction of jobs
• Is a healthy phenomenon in a dynamic, and growing economy

• Is the unemployment that arises because of easonal weather patterns
• Usually increases during the winter months and decreases during the spring and summer

• When there is no cyclical unemployment, or equivalently, when all the unemployment is frictional, structural and seasonal
• The divergence of the unemployment rate from full employment is cyclical unemployment

• The level of real GDP that the economy would produce if it were at full employment
• Because unemployment rate fluctuates around natural unemployment, real GDP fluctuates around potential GDP

     Output Gap = (Real GDP - Potential GDP) _{X 100}

                                  Potential GDP

• Is the gap between the real GDP and the potential GDP
• Is calculated as a percentage of the potential GDP

• The output gap when real GDP exceeds potential GDP
• The output gap is this case is positive

• The output gap when real GDP is less than potential GDP
• The output gap is this case is negative

1. When output gap is a deflationary gap, the inflation rate slows
2. When output gap is inflationary gap, the inflation rate speeds up
3. Notice that it is the change in the inflation rate and not the inflation rate itself that is most closely related to the output gap and that the relationship is not a precise one
4. The output gap is correlated with the change in the inflation rate but the correlation is not strong

P. 101

Describe the trends and fluctuations in the indicators of labour market performance in Canada?

P. 101

P. 101

One of the main reasons for monitoring the labour market every month is to keep track of _____

cuclical state of the economy

Statistics Canada measure real GDP every ____

quarter

True or False

Real GDP provides a good guide to where the economy was but it doesnt measure the current state of economy

True or False

We measure unemployment rate every month. This number is never revised

T

1. Unemployment rate
2. CPI
3. Inflation rate

Note: These numbers are never revised

Output Gap = Real GDP - Potential GDP _{X 100}

           Potential GDP