Why unemployment is such an important

It is widely recognized as a key indicator of labor market performance. A closely watched economic indicator, the unemployment rate attracts a great deal of media attention, especially during recessions and tough economic times. Why Does the Unemployment Rate Matter?

Why unemployment is such an important

But thanks to a working paper released this week by the National Bureau of Economic Research, perhaps it should be. The paperauthored by Alexander Gelber at Berkeley, Judd Kessler at Penn, and Adam Isen at the Treasury Department, found that youth who participate in summer employment programs are better off, at least by some key criteria.

But the benefits arrive in ways you might not expect. How to Teach Kids from Kindergarten to College About Money Consistent with past studies, the new study finds little evidence that summer job programs increase future employment or earnings among participants.

Indeed, for reasons that are not yet clear, their results suggest that participants may actually earn less than nonparticipants in the three years following summer employment. Youth who participate in summer work programs are less likely to end up in jail.

Summer jobs save lives. With unemployment at 5.

Why Does the Unemployment Rate Matter?

But those top-level aggregates tell us nothing about how various subgroups are faring. If we parse the data by age group, we see that young people by far are the most likely to be unemployed. If you graduate when unemployment is high, chances are your earnings will be less than they would have been, even decades later.

The Best Paying Jobs for High School Graduates And the recent difficulties of young people in the labor market are not a new trend; young people have long had the greatest difficulty maintaining stable employment.

The figure below, which comes from a recent report I authored for The Century Foundation, tracks the unemployment rates among various age groups from towith toyear-olds a dramatic outlier.

Even today, the youth unemployment rate remains higher than that endured by any other cohort during the depths of the Great Recession. To dispel a popular misconception: By definition, the unemployment rate measures only the fraction of people who are out of work and actively looking for a job.

Why unemployment is such an important

Or, more precisely, why is it up? Well, education does matter—not because school preempts work, but because, quite straightforwardly, many jobs demand levels of education young people have not yet attained.

Unemployment - Wikipedia

The same goes for experience: Why assume the economy has a fixed number of jobs? That is, when one person is working, he or she has more to spend on the stuff others are selling. In fact, research by Jonathan Gruber yes, the now infamous architect of Obamacare and others has found that the labor market is precisely the opposite of boxed: It turns out the unemployment gap between youth and everyone else can be explained entirely by their propensity to leave jobs, or what is known as their separation rate.

Think of the labor market like an all-you-can-eat buffet. Even so, a youth unemployment rate of It is also not a given that the youth unemployment rate should be three times higher than the rate for prime-age workers — that's a huge gap. It's even higher for minorities and those from disadvantaged backgrounds.

Given how important early labor market experiences can be for career trajectories including future productivity growthwe ought to be concerned when youth struggle to find work.

Which brings us back to summer jobs. The toyear-olds selected for the program work up to 25 hours a week, for six weeks, at the minimum wage, while also receiving workplace education.

Why Youth Unemployment Is Still a Huge Problem | The Fiscal Times

Because the program has far more applicants than openings inonly 36 percent ofapplicants were acceptedslots are allocated via lottery, which creates exactly the sort of randomization researchers live for. After four years, employment rates and earnings in the two groups become indistinguishable. And alums are no more likely to enroll in college, either.The national unemployment rate is defined as the percentage of unemployed workers in the total labor force.

It is widely recognized as a key indicator of labor market performance. A closely. YOUTH unemployment is blighting a whole generation of youngsters. The International Labour Organisation estimates there are 75m 15 .

The least important change was the one that is best measured: people who have a bout of unemployment at the beginning of their careers still earn less than their peers ten .

Some other forms of unemployment are, however, included in the calculation; such as frictional unemployment, voluntary unemployment, or structural unemployment. For example, large sections of the economy maintain a work force which is seasonal or cyclical, and will not have workers at all times of the year.

Oct 01,  · explain why this is an important issue. unemployment is used as an economic strenght indicator to begin with. In the case of recovery it tends to be a laging indicator meaning that it is one of the last indicators to r-bridal.com: Resolved.

This is unemployment caused by the time people take to move between jobs, e.g. graduates or people changing jobs. There will always be some frictional unemployment in an economy because information isn’t perfect and it takes time to find work. This occurs when people choose to remain unemployed.

The Unemployment Rate: How it Affects Everyone | Investopedia