natural rate of unemployment Flashcard Example #55624

the friction of employed individuals (E) that lose their jobs is called the …………………….. (S)
rate of separation
the fraction of unemployed individuals (u) that find a job is called the ……………………..
job finding (F)
labour force L = ………….
L = E + U
unemployment rate = u = ……………
u = U / L
what is the condition for stable employment (steady state)?
Everyone who is losing their job is replaced by somebody who has found a job

sE = fU

job separation = Job finding

what is the formula for the natural rate of unemployment
u = U/L = 1/(1+f/s)
define frictional unemployment
people do not instantaneously jump from one job to another
What are the main determinants? (Job finding) (3)
1) the preferences of workers and the authorities of workers do not always match

2) there is not perfect information concerning candidates and jobs

3) mobility of workers is not instantaneous

What are the main determinants of S?
1) sectoral shifts

2) failure of firms

3) quits

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