The Labor Market: Basic Concepts
The Department of Labor and Employment (DOLE) prepare reports regarding the results of a household survey that provides an estimate of the number of people with a job, the employed (E), as well as the number of people who are looking for work but cannot find a job, the unemployed (U). The labor force (LF) is the number of employed plus unemployed:
LF = E + U
The unemployment rate is the number of people unemployed as a percentage of the labor force:
Unemployment rate = unemployed / labor force
To repeat, to be unemployed, a person must be out of a job and actively looking for work. When a person stops looking for work, he or she is considered out of the labor force and is no longer counted as unemployed. It is important to realize that even if the economy is running at or near full capacity, the unemployment rate will never be zero.
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