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## AP®︎/College Macroeconomics

### Course: AP®︎/College Macroeconomics>Unit 2

Lesson 3: Unemployment

# Unemployment rate primer

Not everyone who isn't working is considered unemployed. Learn how the official rate of unemployment is calculated in this video, and learn what it means to be officially unemployed. Created by Sal Khan.

## Want to join the conversation?

• How are the homeless people and people living off the grid counted on the surveys? Will the method used to conduct the survey (phone or internet) create a bias... I am curious about the effect of illegal immigrants on the unemployment rate as well.
• If they are off the grid, how can they be counted? By definition, they are uncounted.
• Is it normal for a country to have a labour force being half the size of the population( 154 m to 304 m)? Does it affect the general wealth of the nation, does e.g. Finland have roughly the same statistics in this matter?
• When we hear about unemployment rates on the news it seems like it is often associated with the number of people who applied for unemployment benefits for the first time. How does that number relate to this video?
• Is the "unemployment rate formula" (mentioned in this video) the same for all countries ?
• No, there are countries that don't have that definitions (u-1 until u-6). I live in Europe and normally the unemployment rates shows what some high people wants. I hope you understand what I mean.
• 01001001 00100000 01100011 01100001 01101110 00100111 01110100 00100000 01100010 01100101 01101100 01101001 01100101 01110110 01100101 00100000 01111001 01101111 01110101 00100000 01100001 01100011 01110100 01110101 01100001 01101100 01101100 01111001 00100000 01110111 01100001 01101110 01110100 01100101 01100100 00100000 01110100 01101111 00100000 01101011 01101110 01101111 01110111 00100000 01110111 01101000 01100001 01110100 00100000 01110100 01101000 01101001 01110011 00100000 01110011 01100001 01111001 01110011 00100001
• How do we know, for sure, if a person staying home for over 2 months is whether actively searching for a job (unemployed) or is taking time relaxing and doing nothing for a while
(not in the labor force) ? Of course, he is an adult in the Age of Labour (that's the word i often use)
• Of course, they just ask the person and they expect that the human is not lying.
(1 vote)
• So would we want a high unemployment rate? Because it would mean more people are entering the workforce according to what I gleaned from this video. If yes, then a decrease in unemployment would be bad, right?
• From what I learned from this video, It cannot be determined that high/low unemployment is right/wrong.
Because the implicit purpose seems to be, To know the amount of unemployed people available.
And this term [unemployment rate] simply doesn't tells that.
(1 vote)
• Why has the 4 week threshold been set there?
(1 vote)
• That is the time frame used by the Bureau of Labor Statistics in the Current Population Survey, which is used to calculate the official rate of unemployment.
• It seems reasonable to assume there might be some social stigma attached to people who are unemployed and not actively seeking employment. Given that unemployment surveys require people to self report on their activities is it also reasonable to assume that people might not want to admit they are currently not actively seeking employment? If those two assumptions are correct is it safe to say there may be a relatively significant portion of people who are actually not actively seeking employment who claim they are?

If that is an accurate assumption, would that mean that both the "actively seeking employment" portion - as well as the size of the "labor market" - are overstated? If both the numerator (people actively seeking employment) and the denominator (size of the labor force) are increased is there a way to tell if that scenario increases or decreases the unemployment rate?
• Do people lie in surveys? Almost certainly! However, statistical agencies are well aware of that and make adjustments.

For example, the Bureau of Labor Statistics is the agency charged with collecting employment data in the United States. One of the surveys they draw on is a household survey, the Current Population Survey, which asks people about their employment behavior. One way this survey addresses the potential for dishonesty is asking a lot of indirect questions. But data on unemployment is also based on data from another data set, the Current Employment Statistics.

Is any measure perfect? Probably not. But agencies go to great lengths to make them as accurate as possible.