Causes and types of unemployment. Natural rate of unemployment

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CONTENT

INTRODUCTION

CONCLUSION

INTRODUCTION

The global economic crisis, which began in 2008, is inexorably increasing the growth rate of unemployment in Russia. Such a high growth rate has led to the fact that the unemployment situation in the United States is significantly higher in all respects than the situation in the United States, despite the fact that the United States is the birthplace of the crisis. In 2009, according to official sources, the growth rate of unemployment began to decline. And in the summer of that year, the growth in unemployment stopped completely. Growth has stopped, but the level has remained the same, despite all the government's attempts to reduce this figure by creating new jobs.
Unemployment in a market economy is a socio-economic phenomenon in which a certain proportion of the labor force is not used in the production of services and goods. The labor force refers to the number of employed and unemployed people.
The natural level of unemployment is a level that corresponds to full employment (includes frictional and structural forms of unemployment), is due to natural reasons (staff turnover, migration, demographic reasons), and is not associated with the dynamics of economic growth.
The reasons for the natural rate of unemployment are the balance of labor markets, when the number of workers seeking equals the number of vacant jobs. Therefore, full employment does not mean 100% absence of unemployment, but only a certain minimum required level of unemployment. The natural rate of unemployment is, to a certain extent, a positive phenomenon.

1. CONCEPT AND CONTENT OF NATURAL UNEMPLOYMENT

Unemployment is a socio-economic phenomenon that implies a lack of work among people who make up the economically active population.
The natural level of unemployment is an objectively developing, relatively stable, unrelated to the dynamics of economic growth, level of unemployment caused by natural causes: staff turnover, migration, demographic factors. The natural rate of unemployment is believed to be 4-5% of the labor force.
The natural rate of unemployment is to some extent a positive phenomenon, because the “frictional” unemployed need time to find suitable vacancies. The “structural” unemployed also need time to acquire qualifications or move to another location when necessary to obtain a job. If the number of job seekers exceeds the available vacancies, then labor markets are not balanced; At the same time, there is a deficit in aggregate demand and cyclical unemployment. On the other hand, with excess aggregate demand, there is a “shortage” of labor, that is, the number of available jobs exceeds the number of workers waiting for work. In such a situation, the actual unemployment rate is below the natural rate. The unusually “tense” situation in labor markets is associated with inflation.
The concept of “natural rate of unemployment” requires clarification in two aspects.
First, this term does not mean that the economy always operates at the natural rate of unemployment and thereby realizes its productive potential. In our summary of the business cycle, we already discussed how unemployment rates often exceed the natural rate. On the other hand, in rare cases, an economy may experience a level of unemployment that is below the natural rate. For example, during the Second World War, when the natural rate was about 3-4%, the demands of war production led to an almost unlimited demand for labor. Overtime and part-time work have become commonplace. Moreover, the government did not allow workers in “essential” industries to quit, artificially reducing frictional unemployment.
The actual unemployment rate for the entire period from 1943 to 1945 was less than 2%, and in 1944 it fell to 1.2%.
The economy was exceeding its production capacity but was putting significant inflationary pressure on output.
Secondly, the natural rate of unemployment in itself is not necessarily constant; it is subject to revision due to institutional changes (changes in the laws and customs of the union). For example, in the 1960s, many believed that this inevitable minimum of frictional and structural unemployment was 4% of the labor force. In other words, it was recognized that full employment was achieved when 96% of the labor force was employed. And currently, economists believe that the natural rate of unemployment is approximately 5 - 6%.
Why is the natural rate of unemployment higher today than in the 60s? First, the demographic composition of the workforce has changed. In particular, women and young workers, who have traditionally had a high proportion of unemployed, have become a relatively more important component of the labor force. Secondly, institutional changes have occurred. For example, the unemployment compensation program was expanded both in the number of workers it covered and in the amount of benefits. This is important because unemployment compensation, by weakening its impact on the economy, allows the unemployed to more easily look for work and thereby increases frictional unemployment and the overall unemployment rate.

2. NATURAL LEVEL OF UNEMPLOYMENT, TYPES AND CAUSES OF UNEMPLOYMENT

The natural unemployment rate (NAIRU) is determined by averaging the actual unemployment rate in the country over the previous 10 years (or a longer period) and the next 10 years (forecast estimates are used taking into account the probabilistic dynamics of the expected inflation rate).
In industrial countries (for example, in the USA), to obtain appropriate monitoring, the statistical department of the Ministry of Labor conducts monthly sample surveys of approximately 60 thousand families about attitudes towards employment. However, statistical errors are inevitable because, for example, people who are not actively looking for work may indicate on their unemployment benefits application that they are looking for jobs. As a result, both actual and natural unemployment rates will be overestimated.
On the other hand, those who are employed in the “shadow” economy often call themselves unemployed - as a result, the higher the unemployment rate, the larger the share of the “shadow” sector. The latter is especially relevant for economies in transition, where a significant share of those employed in “shadow” business is combined with the lack of adequate statistical monitoring of the economy, underdeveloped labor market infrastructure, and the maintenance of “hidden” unemployment as a factor in the relative stabilization of government spending and the reduction of social risk.
Therefore, calculations of the unemployment rate in transition economies, including the Russian one, often take on the character of expert assessments.
The natural level of unemployment is an objectively developing, relatively stable long-term level of unemployment, due to natural reasons (staff turnover, migration, demographic factors), not related to the dynamics of economic growth.
The natural rate of level of unemployment (u*) is the level at which full employment of the population (full-bail) of the labor force is ensured, i.e. its most effective and rational use. This means that all people who want to work find work. The natural rate of unemployment is therefore called the full-Population employment rate of jobless rate, and the output corresponding to the natural rate of unemployment is called natural output. Since the full employment of the labor force means that there is only frictional and structural unemployment in the economy, the natural rate of unemployment can be calculated as the sum of the levels of frictional and structural unemployment:

The modern name of this indicator is the non-accelerating consumer price index rate of level of unemployment - NAIRU. Consider the graph of economic growth and the business cycle.
Each point on the curve representing economic growth, i.e. each point on the trend corresponds to the value of potential GDP or the state of full employment of resources (points B and C). And each point on the sinusoid representing the economic cycle corresponds to the value of actual GDP (points A and D). If the actual volume of output exceeds the potential (point A), i.e. If the actual unemployment rate is below the natural rate, this means that aggregate demand exceeds aggregate output. This is an over-busy situation. When moving from point B to point A, the price level increases, i.e. acceleration of inflation. Thus, when the economy is at its potential output level (full employment level), which is the natural rate of unemployment, inflation does not accelerate.

The magnitude of the natural rate of unemployment varies over time. So, in the early 60s it accounted for 4% of the labor force, and currently 6% - 7%. The reason for the increase in the natural rate of unemployment is an increase in the length of time it takes to find a job (i.e., the length of time people are unemployed), which may be due to:
1) increasing the amount of unemployment benefits;
2) increasing the length of time for paying unemployment benefits;
3) an increase in the share of women in the labor force;
4) increasing the share of young people in the labor market.
The first two factors provide the opportunity to search for work over a longer period of time. The last two factors, which mean a change in the gender and age structure of the labor force, increase the number of people entering the labor market for the first time and looking for work (i.e., an increase in the number of unemployed), increase competition in the labor market and lengthen the period of job search.
To calculate the natural rate of unemployment, a dynamic model of a stable unemployment rate (“labor force dynamics model”), proposed by M. Friedman, can be used, who proceeded from the fact that the main cause of unemployment is imperfect information. Some of the employed lose their jobs, becoming unemployed, and some of the unemployed get employed and become employed.

In a steady state, the number of employed people who lose their jobs and become unemployed is equal to the number of unemployed people who find work and become employed. If we denote the share of the employed who have lost their jobs from the total number of employed by the letter s, and the share of the unemployed who have found work from the total number of unemployed by the letter f, then in a steady state:
Because, then or
From here or.
Divide both sides by L, we get:
Since U/L is an indicator of the unemployment rate, i.e. u, then from here:
Since the premise of the model is the idea that the cause of unemployment is imperfect information, the resulting value of the unemployment rate (u) can be considered an indicator of the natural rate of unemployment (u*). So, if the average period of a person being among the employed is 80 months (this means that 1/80 of the employed lose their jobs every month, i.e. s = 1/80), and the average period of a person being among the unemployed is 5 months (hence, monthly in the economy 1/5 or 20% of the unemployed find work, i.e. f = 0.2), then the sustainable unemployment rate will be u = s / (s + f) = 0.0125 / 0.2125 = 0.0588 or approximately 5.9%.
Actual unemployment may exceed its natural level. This occurs when there is a downturn in the economy (economic downturn) in the economy. Unemployment caused by a recession is cyclical unemployment. On the business cycle graph, this situation is represented by point D, where actual GDP is less than potential. This means that the economy has underemployment of resources, i.e. the actual unemployment rate is higher than the natural rate. In modern conditions, the existence of cyclical unemployment is associated both with the insufficiency of total costs in the economy, i.e. both a reduction in aggregate demand and a reduction in aggregate supply.
The actual unemployment rate is calculated as a percentage of the total number of unemployed people to the total labor force or as the sum of unemployment rates of all types (frictional, structural and cyclical):
Since the sum of the levels of frictional, structural and involuntary unemployment is equal to the natural level of unemployment, the actual level of unemployment is equal to the sum of the natural level of unemployment and the level of cyclical unemployment: u actual = u* + u cycle.
The actual unemployment rate can be either greater (during an economic recession) or less (during a boom) the natural rate of unemployment. Thus, during a recession in the economy, there is underemployment of resources, so the level of cyclical unemployment is a positive value, and during a boom, there is overemployment of resources, so the level of cyclical unemployment is a negative value.
The natural rate of unemployment for each specific year is determined as the arithmetic average of the unemployment rates for the previous 10 and subsequent 10 years, using the method of extrapolation of trends.
The rate of natural unemployment is sometimes called total unemployment, meaning that the unemployment rate is never zero because, for natural reasons, people are constantly leaving the ranks of the unemployed and joining them. Someone, for example, is looking for a job for the first time, someone is busy looking for a better job, that is, people spend time looking for work, being unemployed during this period.
Even when the economy is at its peak, not all people have jobs. This happens if, for example, the demand for a certain specialty falls and society does not currently need so many specialists in a certain profile, or a structural restructuring of the economy is underway in a given region.
Natural unemployment (Un) combines two types of unemployment:
1. Friction (UFR)
2. Structural (Ustr)
Frictional unemployment is associated with searching and waiting for work, or looking for a better job, also those who are looking for work for the first time, for example, after graduating from college. This also includes those who lose their seasonal jobs, or people who have already found a place of work, but have not yet started work for some time.
Structural unemployment is associated with changes in the structure of demand, with technological shifts, as well as targeted government actions to change the structure of priorities in the economy.
The margin between structural and frictional unemployment is that structural unemployment can be more protracted because it takes time to retrain people who become unemployed as a result of restructuring the economy. However, both structural and frictional unemployment are quite natural and natural for any federation.
The natural rate of unemployment may change over time. If, for example, in the 60s in the USA the natural unemployment rate was 4%, now it is 5 - 6%.
The reasons for the increase in the natural rate of unemployment may be:
1. Anti-inflationary policy of states;
2. Prolonged economic downturn.
For example, in England in 1979, inflation reached 18%, and unemployment throughout the 70s was quite low - only 3.4%. After M. Thatcher, becoming Prime Minister, began to pursue tight monetary and fiscal policies, inflation fell to 5% in 1984, but unemployment rose to 11.1%. After inflation stabilized, the unemployment rate remained persistently high, that is, the natural rate of unemployment in the country increased.
This kind of complication “after treatment” of the economy from high inflation is known in macroeconomics as hysteresis.
Hysteresis is the long-term effects of certain economic phenomena, such as the natural rate of unemployment.
Hysteresis effect - state of unemployment; having reached a sufficiently high level, it can, to a certain extent, self-reproduce and remain there. The economic reasons for hysteresis (long-term labor market rigidity) are controversial. Some institutional factors lead to hysteresis. For example, social insurance, especially unemployment insurance, can, through the tax system, reduce firms' demand for labor in the formal economy. Unemployment can lead to a loss of human capital and the “tagging” of those who remain unemployed for long periods of time. Unions may negotiate to maintain the welfare of their actual members while ignoring the interests of outsiders who find themselves unemployed. Fixed costs associated with changing positions, jobs, or industries can also lead to hysteresis. Finally, there may be difficulties in distinguishing between real and apparent hysteresis phenomena when the final state of the system is determined by its current dynamics or its initial state. In the first case, hysteresis reflects our ignorance: by adding missing variables and information, we can more fully describe the evolution of the system being studied. Dr. interpretation of the phenomenon of hysteresis is the simple existence of several equilibrium states when invisible influences move the economy from one equilibrium state to another.
A prolonged recession could have the same consequences. An economic downturn can lead to long-term negative consequences, resulting in an increase in the natural rate of unemployment. The fact is that when people become unemployed, they lose valuable skills, which subsequently reduces their chances of getting a job; some people leave the country in search of work, as is the case in Moldova. In this case, labor resources (L), which are the basis of potential output in the economy, also decrease quantitatively.
During prolonged downturns in the economy, forced idleness can change people's attitudes toward work and reduce their desire to get a job.
All these reasons lead to an increase in frictional unemployment, and then to an increase in the natural rate of unemployment in the country.
For the natural rate of unemployment, another name is used - the unemployment rate that does not accelerate inflation - NAIRU-(Non-Accelerating-Information Rate of Unemployment). That is, Un is the threshold below which inflation begins to accelerate.
The main reasons for the existence of a natural (sustainable) level of unemployment
Increased job search time under the unemployment insurance system. Payment of unemployment benefits relatively reduces incentives for quick employment - the time for searching for a suitable job, retraining, etc. increases. In the long term, this contributes to achieving a greater balance in the structure of Jobs and the structure of the labor force. At the same time, an increase in unemployment benefits and the period of their payment contributes to an increase in the number of unemployed and an increase in the unemployment rate.
The stability (rigidity) of wages gives rise to “unemployment of expectation.” Expectation unemployment occurs as a result of the level of real wages exceeding its equilibrium value.

“Rigidity” of wages leads to a relative shortage of Jobs: workers become unemployed because at a given level of wages (w/P) the supply of labor L2 exceeds the demand for labor Lb and people simply “crave” the opportunity to get a job at a fixed rate of pay.
Unemployment rates vary across demographic groups. So it is significantly higher among young people than in other groups.
The trend towards an increase in the natural rate of unemployment in the long run is associated with:
1. increasing the share of youth in the labor force;
2. increasing the share of women in the labor force;
3. more frequent structural changes in the economy.
Natural Rate of Unemployment Hypothesis
The natural rate hypothesis is an assumption made by the American economist N. Gregory Mankiw in his work “Macroeconomics” that the dynamics of production volumes, employment and unemployment depend on fluctuations in the resulting demand only in the short term, and in the long term it is described by the classical model .

Okun's law is an empirical relationship between the growth rate of unemployment and the growth rate of GNP in the United States in the early 60s, suggesting that an excess of the unemployment rate by 1% above the level of natural unemployment reduces real GNP compared to potential by 2.5%. For other countries and other times it may be numerically different. Named after the American economist Arthur Okun. In reality, this is not a law, but a trend with many restrictions across countries, regions, the world as a whole and time periods.
(Y ? Y *) / Y * = ? Buc
Y - actual GNP
Y* - potential GNP
uc - cyclical unemployment rate
B - empirical sensitivity coefficient (usually assumed to be 2.5%)
Each country will have its own coefficient B, depending on the period.
It follows from the formula that if there is no cyclical unemployment in the country, the actual GNP is equal to the potential, i.e. All possible production resources are used in the economy.
Corollary to Okun's law:
(Y1 ? Y0) / Y0 = ? B(u1 ? u0) / (1 ? Bu0)
Y1,u1 - GNP and unemployment rate in the current period
Y0,u0 - GNP and unemployment rate in the base period
Practice shows that Okun's law is not always satisfied, i.e. is not a universal economic law.

Excessive unemployment entails large economic and social costs.
The main cost of unemployment is unproduced output.
When economists fail to create enough Jobs for everyone who is willing and able to work, the potential production of goods and services is lost forever. Unemployment prevents the union from continually moving up the potential opportunity curve. Economists define this lost output as a lag in GDP. This lag represents the amount by which actual GNP is less than potential GNP. Moreover, the higher the unemployment rate, the greater the lag in GNP.
A well-known researcher in the field of macroeconomics, A. Okun, mathematically expressed the relationship between the unemployment rate and the lag in GNP. Okun's law states that if the actual unemployment rate exceeds the natural rate by 1%, then the lag in GNP is 2.5%. This ratio of 1:2.5 or 2:5 allows one to calculate the absolute loss of output associated with any level of unemployment.
The economic costs of unemployment are unequally distributed among those employed in the economy:
- The unemployment rate for white collar workers is lower than for blue collar workers. This is because white-collar workers are employed in industries that are less subject to cyclical fluctuations or they work for their own firm;
- The unemployment rate among young people is higher than among adults. This is explained by the fact that young people have low qualifications, are more likely to leave work and be fired by their employers, and are also less mobile;
- The unemployment rate among men is higher than among women. The fact is that the highly cyclical industries that produce capital goods (automobiles, steel and construction) are dominated by men;
- The unemployment rate among immigrants - both adults and youth - is higher than among the local population.
Cyclical unemployment is a real social catastrophe. Economic decline and depression lead to inactivity, and inactivity leads to loss of skills, loss of self-esteem, decline in moral values, family breakdown, and social and political unrest.
History convincingly shows that mass unemployment leads to rapid, sometimes very violent, social and political change. This was evidenced by the leftward shift in American political theory during the Great Depression, and the New Deal was a true revolution in American political and economic thinking. An example of such global changes is Hitler’s rise to power in conditions of unemployment. Moreover, there is no doubt that the high percentage of unemployment among national minorities is a serious cause of the unrest and violence that arises in times of crisis and depression. As for ordinary people, researchers find a direct link between increases in homicides, deaths from cardiovascular disease, mental illness, suicide and high unemployment.
At any given period in different countries, unemployment rates differ significantly from each other. These differences are explained by the fact that different countries have different natural rates of unemployment, and also because these countries may find themselves in different phases of the economic cycle. The annual average unemployment rate in the United States is lower than that of the Maple Leaf, Australia, France, Britain and the Russian Federation.
The Phillips curve is a graphical representation of the inverse relationship between the inflation rate and the unemployment rate.
Named after the English economist Alban Phillips, who, based on empirical data for Great Britain for 1861-1957, derived a correlation between the unemployment rate and changes in the growth of money wages.
The dependence initially showed the connection between unemployment and changes in wages: the higher the unemployment, the lower the increase in money wages, the lower the price growth, and vice versa, the lower the unemployment and the higher the employment rate, the greater the increase in money wages, the higher the rate of price growth. Subsequently it was transformed into a relationship between prices and unemployment.
In the long term, it is a vertical straight line, in other words, it shows the absence of dependence between the inflation rate and the unemployment rate.
? - inflation rate,
?e - expected inflation rate,
(U ? Ue) - deviation of unemployment from the natural level - cyclical unemployment,
b > 0 - coefficient,
v - Supply shocks.

3. LEVEL OF NATURAL UNEMPLOYMENT IN RUSSIA AT THE CURRENT STAGE

According to a population survey on employment problems, conducted as of the second week of January 2012, of the total number of unemployed, 2661 thousand people, or 54.2%, were men and 2251 thousand people, or 45.8%, were women. Rural residents accounted for 1,941 thousand people, or 39.5%, among the unemployed.
Unemployment rate in January 2012 amounted to 6.6% (without excluding the seasonal factor).

Average age of unemployed in January 2012 was 34.7 years. Young people under 25 years old make up 28.4% of the unemployed, people aged 50 years and older make up 16.2%.
Average duration of job search for unemployed people in January 2012 was 8.2 months for women, 8.0 months for men.
According to the survey, in January 2012. 30.9% of the unemployed used contacting government employment services as a way to find work, 61.3% of the unemployed used contacting friends, relatives and acquaintances.
The number of unemployed citizens registered with state employment service institutions. By the end of January 2012 In state employment services, 1.5 million citizens were registered as not engaged in labor activities, of which 1.3 million people had unemployed status, including 1.1 million people receiving unemployment benefits.
In January 2012 160.5 thousand people received unemployed status. The number of unemployed people employed was 6.2 thousand people, or 8.6% less than in January 2011, and amounted to 65.2 thousand people.

In January 2012 The load of the unemployed population registered in state employment service institutions per 100 declared vacancies amounted to 117.4 people.
Number of economically active population in January 2012 amounted, according to the results of a population survey on employment problems, to 74.9 million people, or about 53% of the total population of the country, of which 70.0 million people, or 93.4% of the economically active population, were employed in the economy and 4.9 million people (6.6%) did not have an occupation, but were actively looking for one (in accordance with the methodology of the International Labor Organization, they are classified as unemployed). 1.3 million people are registered as unemployed in state employment service institutions.

CONCLUSION

Unemployment is a rather complex and contradictory phenomenon. It has not only negative consequences, but also positive aspects: Firstly, the unemployed, being a labor reserve, are the basis for staffing various enterprises with more or less qualified personnel. Secondly, they create an opportunity for the redistribution of qualified personnel to rapidly growing industries and emerging new enterprises. Thirdly, it makes it possible to get rid of unscrupulous employees. Fourthly, it creates in workers a constant readiness and ability for mobility.
The natural rate of unemployment is an economic hypothesis according to which, for the general economic equilibrium established at a certain real wage, there is a certain underemployment of the population, which is the result of a lack of information, barriers to mobility, demographic changes and other consequences of market imperfections. For these reasons, it is impossible to reduce the unemployment rate to zero, but only to reduce it to a mark determined by market imperfections. Thus, it is impossible to influence the level of such unemployment in a narrow time frame. Only slow impact through regulatory or structural policy methods will help. Eg:
? development of technologies that facilitate job search
? introduction of minimum wage
? trade union organization
? introduction of so-called effective wages, exceeding market wages
According to the theory of M. Friedman, natural unemployment is specific to each economy in accordance with the macroeconomic equilibrium, in which the expected level of inflation is equal to its actual level. An attempt to describe the relationship between inflation and unemployment rates is the Phillips Curve. However, the existence of a direct relationship over a wide time frame between these quantities is denied by Friedman and Phillips. According to them, the inflation rate depends mainly on the money supply, and the unemployment rate, in turn, tends to the level of natural unemployment.

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The most important macroeconomic problem is the existence of unemployment. Its size directly affects the price level and production volume, the structure and forms of income distribution, the state budget and government spending. And macroeconomic indicators such as the level of employment and the unemployment rate are the most important parameters that determine the effectiveness of the economic policy being pursued.

In a market economy, there is always a certain classification of the country's population. In accordance with it, the entire population is divided into institutional And non-institutional.

TO institutional usually include persons who do not temporarily or permanently possess any factors of production, i.e. This is a disabled population. These include children, pensioners, the disabled, the sick, women on maternity leave, etc.

Non-institutional population– these are persons who have any factors of production, i.e. this is the working population.

The entire non-institutional population is divided into economically active(amateur) and economically passive(non-amateur).

Economically active population(labor force) consists of persons working for hire or looking for work for hire. The economically active population includes busy And unemployed.

A to economically passive include persons who are not employed and are not looking for such work (military personnel, students, housewives, people of liberal professions, persons without a fixed place of residence, etc.).

Unemployment is a cyclical phenomenon expressed in the excess of the supply of labor over the demand for it.

International Labor Organization (ILO ) unemployment is defined as the presence of a certain number of people of working age who do not have a job, but are able to work and are currently looking for work.

Thus, according to the definition of the International Labor Organization (ILO), unemployed is considered a person who can work, wants to work, is actively looking for work on his own, but cannot find a job due to a lack of jobs or insufficient professional training.

Unemployment is a socio-economic phenomenon that objectively characterizes a market economy and exists even in conditions of full use of resources, the so-called moderate unemployment.

Moderate unemployment necessary for the normal development of the economy, since it:

– forms a reserve of unemployed labor, which can be used if necessary to expand production;

– strengthens incentives for work and entrepreneurship;

– is an effective means of increasing productivity and labor discipline.

At the same time, unemployment is a negative phenomenon that has a direct and strong impact on every person. Losing a job for most people means a decline in their standard of living and causes serious psychological trauma.

A large number of unemployed people in society leads to economic losses and social upheaval. In order for the state to pursue an effective economic policy, it is necessary to estimate the size of unemployment and determine its level.

To characterize unemployment, two indicators are used:

1) duration of unemployment (the time during which a person remains unemployed);

2) Unemployment rate is the share of unemployed people in the total economically active population.

Where u- unemployment rate;

U– number of unemployed;

E– number of workers (employed).

The unemployment rate is an indicator characterizing the scale of unemployment in the country.

If, for example, the number of unemployed people is 10 million people, and the number of employed people is 90 million, then the economically active population (labor force) is 100 (10+ 90) million people. Hence the unemployment rate is 10% [(10: 100) x 100%].

In the economic literature, the following are distinguished: types (types) of unemployment: frictional, structural, seasonal, cyclical, stagnant.

1. Frictional unemployment This is temporary and voluntary unemployment associated with the voluntary transition of workers from one job to another and initial employment, i.e. covers workers who are seeking or expecting employment in the near future. This is the period between leaving one job and entering another or returning to your previous place.

Frictional unemployment always exists, it is inevitable. It is based on the natural movement of labor resources between enterprises, regions and industries. People will always strive to change jobs in order to get some advantages: higher wages, promotion, reduction of time spent in transport, more interesting work, etc. An essential feature of frictional unemployment is that people looking for work , have the necessary qualifications, professional training and skills. There is a demand for their abilities from capital.

Such unemployment is short-lived, it lasts from 1 to 3 months.

2. Structural unemployment This is a forced form of unemployment that arises as a result of a decrease in demand for labor under the influence of structural changes in the economy, scientific and technological progress, changing the demand for certain professions and specialties.

Thus, structural unemployment is caused by the emergence of a professional and qualification discrepancy between the structure of available jobs and the structure of workers, i.e. discrepancy between the structures of demand and supply of labor by qualification, demographic, geographic and other categories.

Economic development is constantly accompanied by the following structural changes: new technologies emerge, new goods displace old ones. There are shifts in the structure of demand in the capital market, goods market and labor market. As a result of this, changes occur in the professional and qualification structure of the workforce, which requires its constant territorial and sectoral redistribution.

Under the influence of scientific and technological progress, some sectors of the economy are gradually dying out and disappearing, while at the same time new industries and industries are appearing. The structure of labor demand changes accordingly. For example, the advent of automatic production lines led to a reduction in the need for machine tool workers (turners, milling operators, etc.). The development of the production of artificial synthetic materials led to a decrease in steel production and, accordingly, to a reduction in workers in the metallurgy.

Disproportions in the development of enterprises in different industries in the regions also lead to structural unemployment. For example, in the 60–70s, weaving production predominated in Ivanovo, which traditionally provided employment for women, and men turned out to be “superfluous,” so the comprehensive development of the region was required, in particular the creation of machine-building factories.

Structural unemployment also arises from changes in geographic distribution; work places. The workforce is slow to respond to changes in demand. So, for example, a miner who lost his job due to the closure of a mine must either move to another region and work at another mine there, or undergo retraining and acquire a different profession. At the same time, finding and getting a new job requires some time, the availability of relevant information, the necessary infrastructure - a developed housing market, the absence of obstacles when choosing a place of residence (obtaining a residence permit, registration or residence permit). An important feature of structural unemployment is that the qualifications and training of the unemployed do not fully correspond to the existing demand from capital.

One form of structural unemployment is technological unemployment, resulting from the introduction of new technologies and new equipment, which leads to the replacement of people by machines and the liberation of them. Moreover, if the market volume increases, then employment increases mainly due to the involvement of workers in new professions and higher qualifications.

Thus, structural unemployment occurs when workers who have lost their jobs in some sectors of the economy as a result of structural changes cannot be employed in available jobs that are available in other industries (sectors, regions). Structural unemployment differs from frictional unemployment in its longer duration and is typical for workers with low qualifications or an outdated profession, and also covers the population of economically backward areas.

Such unemployment lasts approximately from 3 months to 1 year.

3. Cyclical (conjunctural) unemployment this is the release of labor caused by a general decline in production, i.e. that phase of the economic cycle characterized by a reduction in aggregate demand, production and employment. It affects all spheres and sectors of the economy. The magnitude of cyclical unemployment changes periodically, reflecting the dynamics of the economic cycle.

During a cyclical downturn, cyclical unemployment complements frictional and structural unemployment; During periods of cyclical expansion there is no cyclical unemployment.

Unemployment caused by a decline in production (opportunistic) may exist in hidden And open forms.

Hidden form means reducing the working day or week, sending staff on forced leave and, accordingly, reducing wages.

Open form means the dismissal of an employee, a complete loss of work and, accordingly, income.

At the same time, the decline in employment does not affect different segments of society to the same extent. First of all, insufficiently qualified workers, women, and representatives of national minorities lose their jobs. Highly qualified personnel are employed in industries that are less susceptible to cyclical fluctuations (nuclear energy, computer science, electronics, etc.). In those industries where there is a decline, entrepreneurs are interested in retaining qualified personnel, since substantial funds have been spent on their training and education. If the economic situation picks up, the laid-off worker may not return to his previous position, and the company will have to train new staff.

With cyclical (opportunistic) unemployment, the supply in the labor market is less than the demand that capital places on labor resources.

Cyclical unemployment is the deviation of the actual unemployment rate from the natural rate. Cyclical unemployment is associated with a decrease in real GNP and the release of part of the labor force, which leads to an increase in the number of unemployed. It is also necessary to distinguish between real and fictitious unemployment. The characteristic features of the first are the ability to work and the desire to work of an employee who, for certain reasons, does not have a job; the second is reluctance to engage in labor activity for one reason or another.

4. Seasonal unemployment is caused by seasonal fluctuations in the volume of production of certain industries (i.e., depending on the time of year): agriculture, construction, crafts, in which sharp changes in labor demand occur during the year. Seasonal fluctuations in the demand for labor, as a rule, are determined by the rhythm of the production process. Therefore, the size of seasonal unemployment in general can be predicted and taken into account when signing contracts between employers and employees.

5. Long-term unemployment caused by excess labor and overpopulation. Covers the most professionally untrained part of the workforce. These are, as a rule, bankrupt peasants, former housewives, unskilled workers and others. Such unemployment can last for years. Its representatives, living on benefits or odd jobs, wander and beg, gradually turning into lumpen and sinking to the social bottom. They can only get permanent jobs as a last resort, when the economy is booming and labor becomes scarce.

It is obvious that at any given moment in the country there is a certain frictional, structural and seasonal unemployment, i.e. some part of the workers is constantly away from their workplaces. These workers form the so-called “natural” or “normal” unemployment, which always exists in any country.

Natural unemployment – a stable number of unemployed people covered by frictional, structural and seasonal unemployment over a long period of time. It characterizes the state of the labor market in which there is approximately equality between the number of available jobs and the number of workers looking for work.

Concept natural rate of unemployment , first introduced into scientific circulation by M. Friedman. According to M. Friedman, the natural level of unemployment reflects the economic feasibility of using labor, just as the degree of utilization of production capacity reflects the feasibility and efficiency of using fixed capital.

By forming a reserve of labor, natural unemployment allows for the expansion of production without rising prices.

Since natural unemployment exists constantly and without it the normal functioning of a market economy is impossible, the concept of “full employment” does not mean 100% employment of the labor force, but presupposes the presence of natural unemployment. Thus, the problem of ensuring full employment of the population turns into a problem of maintaining unemployment at the natural level.

The amount of natural unemployment depends primarily on demographic, institutional and social factors. For example, an increase in the share of young people among the unemployed leads to an increase in frictional unemployment. The development of infrastructure in the labor market (labor exchanges, employment services, organization of public works, etc.) leads to a decrease in natural unemployment, as well as an increase in the level of minimum wage, unemployment benefits, and social benefits.

In the real economy the current actual unemployment rate, as a rule, is not equal to the natural level, exceeding it during a period of recession and being lower than the natural level during a period of recovery.

To the unemployed, in relation to the standards of the International Labor Organization (ILO), include persons at the age established for measuring the economic activity of the population, who during the period under review simultaneously met the following criteria:

did not have a job (gainful occupation);
were looking for work, i.e. contacted a government or commercial employment service, used or placed advertisements in the press, directly contacted the administration of the organization (employer), used personal connections, etc. or took steps to organize their own business;
were ready to start work during the survey week.

Students, pensioners and disabled people are counted as unemployed if they were looking for work and were ready to start work.

The unemployed registered with state employment service institutions include able-bodied citizens who do not have work and earnings (labor income), living on the territory of the Russian Federation, registered with the employment service at their place of residence in order to find suitable work, looking for work and ready to start work. her.

Unemployment rate— the ratio of the number of unemployed people of a certain age group to the number of the corresponding age group, %.

Unemployment rate formula

Unemployment rate is the share of unemployed in the total.

It is measured as a percentage and calculated using the formula:

Statistics of the unemployment rate in Russia by year

The unemployment rate (the ratio of the total number of unemployed to the economically active population, %) is shown in Fig. 1.

Rice. 1. Dynamics of unemployment in Russia from 1992 to 2008

The minimum unemployment rate for the analyzed period was in 1992 - 5.2%. The unemployment rate reached its maximum in 1998 - 13.2%. By 2007, the unemployment rate dropped to 6.1%, and in 2008, the unemployment rate increased to 6.3%. It should be noted that the problem of unemployment is most acute not in large regions as a whole, but at the local level: in small and medium-sized cities with a concentration of military and light industry, on unfinished construction sites of large enterprises, in mining villages of the Far North, “closed” zones and etc.

Statistics and structure of unemployment in Russia

In a sociological study of unemployment, it is necessary to take into account its structure, which includes (Fig. 2):

open unemployment - it is formed by status unemployed people registered at labor exchanges and in employment centers at their place of residence. In 2009, their number was 2,147,300 people;
hidden unemployment, which covers non-status unemployed people, i.e. persons who do not have a job or are looking for one, but are not registered on exchanges and employment centers. Their number in 2009 was 1,638,900 people.

The form of unemployment determines the economic behavior of the individual and his level of individual and social mobility in employment and professions.

Rice. 2. Structure of unemployment

Level and scale of unemployment

In 1999 (i.e., after the 1998 crisis), the total number of unemployed reached its maximum for the entire period of economic reforms and amounted to 9.1 million (Table 1). In the second quarter of 1999, the negative trend of increasing the total number of unemployed in Russia was overcome. By 2008 it had dropped to 4.6 million people; At the same time, there were approximately 1.6 million officially registered unemployed.

The threat of job loss and unemployment in society since 1992 has been the most persistent among other types of threats to personal security in Russia.

According to sociological research by VTsIOM, the threat of rising unemployment in Russian society was noted by: 24% of the population in 1996 (February), 27% in 2000 (November), 28% in 2003 (October), 14% in 2007.

One of features of unemployment in Russia— its gender structure. The share of women among the registered unemployed was 65% in 2006, and in a number of northern regions - 70-80%.

The financial and economic crisis has led to increased gender competition in the labor market and increased discrimination against women in the registered market.

Table 1. Dynamics of changes in the structure of Russian unemployed in 1992-2009.

Regarding unemployment in Russia, the following can be said:

unemployment remains high;
in the socio-professional structure of the unemployed, the share of students, pupils and pensioners has decreased significantly since 1992, but in 2009 there was an upward trend;
the number of unemployed in rural areas has increased sharply: from 16.8% in 1992 to 32.4% in 2009;
female unemployment has changed its vector.

Among the status unemployed, the majority are women, and among the non-status unemployed, the majority are men.

Unemployment becomes gender-symmetrical in age. Thus, among men the average age of the unemployed is 34.2 years, among women - 34.1 years. In general, the average age of the unemployed in Russian society is slowly decreasing: from 34.7 years in 2001 to 34.1 years in 2006.

The structure of Russian unemployment has also changed in terms of educational level, but the unemployed remain the most educated among the unemployed in capitalist countries (Table 2). Educational asymmetry in the gender structure of the unemployed indicates that among Russian unemployed people with a high educational status, women predominate, while men are the main low-skilled part of the unemployed population.

Table 2. Gender and educational structure of the Russian unemployed for 2009, %

The characteristics of the marital status of the Russian unemployed are visible from Table. 3. The majority of the registered (status) unemployed are married women. There are 1.5 times more widowed and divorced women among unemployed women than among men. Among the unemployed, there are significantly more single men than unmarried women.

Table 3. Gender and family characteristics of the Russian unemployed at the end of 2009, %

The highest share among the unemployed by age is among young people aged 20-24 (21.8%). Here gender does not play a significant role (22.3% among men, 21.2% among women). The general dynamics of the unemployed by age in gender groups is presented in Fig. 4.3.

Rice. 3. Age and gender structure of unemployed Russians: 1 - men; 2-women

The group at highest risk and threat of becoming unemployed are young people aged 20 to 29 years. The highest increase in unemployment is typical for rural youth (2 times higher than in 1992).

How the two components of the object of economic sociology “employed” and “unemployed” statistically correlate with each other in the category “economically active population” is shown in Table. 4.

IN financial and banking sector Before the financial crisis of 1998, the labor market was very dynamic and expanded rapidly, but after the financial crisis it sharply declined and was seriously deformed, which was accompanied by a reduction in the number of employees (especially in the banking sector) and increased downward social mobility of specialists.

Social negative consequences of unemployment are associated with the transition of an individual from one status state (employed) to another (unemployed) and manifest themselves: in the form of increased depression, a decrease in the level of social optimism, a break in established communication ties, changes in value orientations, and a transition to a marginal state. The main thing is that the individual is deprived of the material basis for his development, the level and quality of his life fall.

Table 4. Structure of the economically active population of Russia in 2008, million people

Duration of unemployment(or the duration of job search) is an important socio-psychological indicator and represents the time during which a person who has lost his job is looking for a new job opportunity, using any means.

The most actively used forms of job search are:

contacting government or commercial employment services;
submitting advertisements to print, responding to advertisements;
contacting friends, relatives, acquaintances;
direct contact with the administration, the employer - Internet search and proactive distribution of resumes to the addresses of potential employers - a form of employment used mainly by the unemployed age groups from 20-24 to 40-44 years.

The average duration of searching for a new job was: 4.4 months. in 1992; 9.7 months in 1999; 7.7 months in 2008. This is a fairly long period, which is explained by competition in the labor and employment market, as well as its limitations, especially in the regions.

Highlight the following types of unemployment :

Voluntary- is associated with people’s reluctance to work, for example, in conditions of lower wages. Voluntary unemployment increases during an economic boom and decreases during a recession; its scale and duration vary among people of different professions, skill levels, as well as among different socio-demographic groups of the population.
Forced (unemployment waiting) - occurs when an employee is able and willing to work at a given wage level, but cannot find a job. The reason is an imbalance in the labor market due to the inflexibility of wages (due to minimum wage laws, the work of trade unions, raising wages to improve the quality of labor, etc.). When real wages are above the level corresponding to the equilibrium of supply and demand, supply in the labor market exceeds demand for it. The number of applicants for a limited number of jobs increases, and the likelihood of actual employment decreases, which increases the unemployment rate. Types of involuntary unemployment:

cyclic- caused by repeated declines in production in a country or region. It represents the difference between the unemployment rate at the current moment of the economic cycle and the natural unemployment rate. It is natural for different countries to have different levels of unemployment.
seasonal- depends on fluctuations in the level of economic activity during the year, characteristic of certain sectors of the economy.
technological- unemployment associated with mechanization and automation of production, as a result of which part of the workforce becomes redundant or requires a higher level of qualifications.

Registered- unemployed population searching for work and officially registered.
Marginal- unemployment of weakly protected segments of the population (youth, women, disabled people) and the lower social classes.
Unstable- caused by temporary reasons (for example, when employees voluntarily change jobs or quit in seasonal industries).
Structural- is caused by changes in the structure of demand for labor, when a structural mismatch is formed between the qualifications of the unemployed and the demand for available jobs. Structural unemployment is caused by large-scale restructuring of the economy, changes in the structure of demand for consumer goods and production technology, the elimination of obsolete industries and professions, and there are 2 types of structural unemployment: stimulating and destructive.
Institutional- unemployment that occurs when the state or trade unions intervene in establishing wage rates different from those that could be formed in a natural market economy.
Friction- the time of voluntary search by an employee for a new job that suits him to a greater extent than his previous workplace.
Hidden:

formally employed but actually unemployed persons; As a result of the decline in production, the labor force is not fully used, but is not fired either.
the presence of people willing to work, but not registered as unemployed. Hidden unemployment is partly represented by people who have stopped looking for work.

Since the existence of frictional and structural unemployment is inevitable, economists call their sum natural unemployment.

Natural rate of unemployment – u*) - this is the level at which full employment of the labor force is ensured, i.e. its most effective and rational use. This means that all people who want to work find work. The natural rate of unemployment is therefore called the full-employment rate of unemployment, and the output corresponding to the natural rate of unemployment is called natural output. Since full employment of the labor force means that there is only frictional and structural unemployment in the economy, the natural rate of unemployment can be calculated as the sum of the frictional and structural unemployment levels:

u * = u friction + u structure = (U friction +U structure)/L * 100%.

Unemployment rate is the share of unemployed people in the total labor force.

It is measured as a percentage and calculated using the formula:

- unemployment rate

- number of unemployed

- labor force (employed and unemployed)

Natural rate of unemployment- the sum of the levels of frictional and structural unemployment.

50) Okun's Law. Consequences of unemployment

A situation in society in which only frictional and structural unemployment exists is called full employment.

The level of unemployment corresponding to the appropriate level of full employment is called natural rate of unemployment(4 – 6 %).

The economic costs of unemployment are expressed in the fact that the country's economy irreversibly loses the amount of goods and services that it could potentially produce from existing resources. The maximum volume of output that can be produced at existing capacity at the top of the economic cycle with full employment is called potential GNP. Thus, economic losses from unemployment are the difference between potential and actual GNP produced at any given moment at any stage of the economic cycle.

The mathematical expression for the gap between the actual volume of GNP and the potential volume was calculated by the American economist Arthur Okun (1928–1980). Potential GNP is the output that would be produced if the economy operated at the natural rate of unemployment.

A. Okun's law states: “If the actual unemployment rate exceeds the natural rate by 1%, then the lag of actual GNP from potential is 2.5%.”

For example, if the actual unemployment rate in a country is 10%, then the unemployment rate exceeds the natural rate of 6% by 4% (10 – 6). Thus, to determine by what percentage the actual volume of national production lags behind the potential volume, you need to multiply 4% by the Okun coefficient (2.5). In this case we get 10% (4 x 2.5). Consequently, in a given period of time, the country loses 10% of the volume of national output that could have been produced in the absence of unemployment.

Unemployment has a negative impact on both economic development and the social situation in society. Thus, the consequences of unemployment include the lag of real GNP from potential GNP, social differentiation of society, growth of social tension in society, and a decrease in living standards. Therefore, government intervention is necessary to solve this problem.

Unemployment- the presence in the country of people who make up part of the economically active population who are able and willing to work for hire, but cannot find work.

Natural rate of unemployment

The natural rate of unemployment is the level at which full employment of the labor force is ensured, i.e. its most effective and rational use. This means that all people who want to work find work. The natural rate of unemployment is therefore called the full employment unemployment rate, and the output corresponding to the natural rate of unemployment is called the natural output. Since full employment of the labor force means that there is only frictional and structural unemployment in the economy, the natural rate of unemployment can be calculated as the sum of the frictional and structural unemployment levels:

u * = u friction + u structure = (U friction +U structure)/L * 100%.

The modern name for this indicator is the non-inflation-accelerating unemployment rate.

Consider the graph of economic growth and the business cycle.

Each point of the curve depicting economic growth (Fig. 1), i.e. each point on the trend corresponds to the value of potential GDP or the state of full employment of resources (points B and C). And each point on the sinusoid representing the economic cycle corresponds to the value of actual GDP (points A and D). If the actual volume of output exceeds the potential (point A), i.e. If the actual unemployment rate is below the natural rate, this means that aggregate demand exceeds aggregate output. This is an over-busy situation. When moving from point B to point A, the price level increases, i.e. acceleration of inflation. Thus, when the economy is at its potential output level (full employment level), which is the natural rate of unemployment, inflation does not accelerate.

increasing the size of unemployment benefits;

increasing the length of time for paying unemployment benefits;

the growing share of women in the labor force;

increasing the share of young people in the labor market.

The first two factors provide the opportunity to search for work over a longer period of time. The last two factors, which mean a change in the gender and age structure of the labor force, increase the number of people entering the labor market for the first time and looking for work (i.e., an increase in the number of unemployed), increase competition in the labor market and lengthen the period of job search.

To calculate the natural rate of unemployment, a dynamic model of a stable unemployment rate (“labor force dynamics model”), proposed by M. Friedman, can be used, who proceeded from the fact that the main cause of unemployment is imperfect information. Some of the employed lose their jobs, becoming unemployed, and some of the unemployed get employed and become employed. These movements (flows) are shown in Fig. 2.

Rice. 2. Labor force dynamics model

Since E = L - U then s*(L-U) = f*U or s*L - s*U = f*U.

Hence f*U + s*U = s*L or U*(s+f) = s*L. Divide both sides by L, we get: U/L*(s+f) = s.

Since U/L is an indicator of the unemployment rate, i.e. u, then hence: u = s/(s+f).

Since the premise of the model is the idea that the cause of unemployment is imperfect information, the resulting value of the unemployment rate (u) can be considered an indicator of the natural rate of unemployment (u*). So, if the average period of a person being among the employed is 80 months (this means that 1/80 of the employed lose their jobs every month, i.e. s = 1/80), and the average period of a person being among the unemployed is 5 months (hence, monthly in the economy 1/5 or 20% of the unemployed find work, i.e. f = 0.2), then the sustainable unemployment rate will be u = s / (s + f) = 0.0125 / 0.2125 = 0.0588 or approximately 5.9%.

Actual unemployment may exceed its natural level. This occurs during a downturn (recession) in the economy. Unemployment caused by a recession is cyclical unemployment. On the business cycle graph (Fig. 1), this situation is represented by point D, in which actual GDP is less than potential. This means that there is underemployment of resources in the economy, i.e. the actual unemployment rate is higher than the natural rate. In modern conditions, the existence of cyclical unemployment is associated both with the insufficiency of aggregate expenditures in the economy, i.e. both a reduction in aggregate demand and a reduction in aggregate supply.

The actual unemployment rate is calculated as a percentage of the total number of unemployed people to the total labor force or as the sum of unemployment rates of all types (frictional, structural and cyclical): . Since the sum of the levels of frictional, structural and involuntary unemployment is equal to the natural level of unemployment, the actual level of unemployment is equal to the sum of the natural level of unemployment and the level of cyclical unemployment: u actual = u* + u cycle.

The actual unemployment rate can be either greater (during a recession) or less (during a boom) than the natural rate of unemployment. Thus, during a recession, there is underemployment of resources, so the level of cyclical unemployment is a positive value, and during a boom, there is overemployment of resources, so the level of cyclical unemployment is a negative value.

The following types of unemployment are distinguished:

Forced (unemployment waiting) - occurs when an employee is able and willing to work at a given wage level, but cannot find a job. The reason is an imbalance in the labor market due to the inflexibility of wages (due to minimum wage laws, the work of trade unions, raising wages to improve the quality of labor, etc.). When real wages are above the level corresponding to the equilibrium of supply and demand, supply in the labor market exceeds demand for it. The number of applicants for a limited number of jobs increases, and the likelihood of actual employment decreases, which increases the unemployment rate.

cyclic- caused by repeated declines in production in a country or region.
seasonal It represents the difference between the unemployment rate at the current moment of the economic cycle and the natural unemployment rate. It is natural for different countries to have different levels of unemployment.
technological- depends on fluctuations in the level of economic activity during the year, characteristic of certain sectors of the economy.

Voluntary- unemployment associated with mechanization and automation of production, as a result of which part of the workforce becomes redundant or requires a higher level of qualifications.

Structural- is associated with people’s reluctance to work, for example, in conditions of lower wages. Voluntary unemployment increases during an economic boom and decreases during a recession; its scale and duration vary among people of different professions, skill levels, as well as among different socio-demographic groups of the population. Also, in economics there is the concept of “unemployment trap”, when a person’s income, regardless of whether he works or not, varies slightly (due to deprivation of rights, upon entering work, for appropriate compensation, additional payments, the beginning of payments of significant contributions insurance, etc.), which reduces a person’s interest in starting work.

Institutional- is caused by changes in the structure of demand for labor, when a structural mismatch is formed between the qualifications of the unemployed and the demand for available jobs. Structural unemployment is caused by large-scale restructuring of the economy, changes in the structure of demand for consumer goods and production technology, the elimination of obsolete industries and professions, and there are 2 types of structural unemployment: stimulating and destructive.

Unstable- unemployment that occurs when the state or trade unions intervene in establishing wage rates different from those that could be formed in a natural market economy.

Friction- caused by temporary reasons (for example, when employees voluntarily change jobs or quit in seasonal industries).

Marginal- during a voluntary search by an employee for a new job that suits him to a greater extent than his previous workplace.

- unemployment of weakly protected segments of the population (youth, women, disabled people) and the lower social classes. Youth unemployment

Registered- among the group of people 18-25 years old.

Hidden:

formally employed but actually unemployed persons; As a result of the decline in production, the labor force is not fully used, but is not fired either.
the presence of people willing to work, but not registered as unemployed. Hidden unemployment is partly represented by people who have stopped looking for work.

Okun's Law

Okun's Law- an empirical relationship between the growth rate of unemployment and the growth rate of GDP in the USA in the early 60s, suggesting that an excess of the unemployment rate by 1% above the level of natural unemployment reduces real GDP compared to potential (increases the GDP gap) by 2.5%. For other countries, under different conditions and for different periods of time, it may be numerically different.

The law is named after the American economist Arthur Okun. In reality, this is not a law, but a trend with many restrictions across countries, regions, the world as a whole and time periods.

where Y is actual GDP, Y* is potential GDP, is the level of cyclical unemployment, B is the empirical sensitivity coefficient (usually taken to be 2.5). Each country will have its own coefficient B, depending on the period.

It follows from the formula that if there is no cyclical unemployment in the country, the actual GNP is equal to the potential, that is, all possible production resources are used in the economy.

Corollary to Okun's law:

Practice shows that Okun's law is not always satisfied, that is, it is not a universal economic law.

Inflation(Latin Inflatio - bloating) - an increase in the level of prices for goods and services. With inflation, the same amount of money will, over time, buy fewer goods and services than before. In this case, they say that over the past time the purchasing power of money has decreased, money has depreciated - it has lost part of its real value.

Inflation should be distinguished from a price jump, as it is a long-term, sustainable process. Inflation does not mean an increase in all prices in the economy, because the prices of individual goods and services may rise, fall, or remain unchanged. It is important that the general price level, that is, the GDP deflator, changes. The opposite process is deflation - a decrease in the general price level (negative growth). In the modern economy, it is rare and short-term, usually seasonal in nature. For example, grain prices tend to decline immediately after harvest. Prolonged deflation is typical for very few countries. Today, an example of deflation is the Japanese economy (within −1%).

Types of inflation:

Uneven price increases across product groups generate inequality in profit rates and stimulate the outflow of resources from one sector of the economy to another (in Russia, from industry and agriculture to trade and the financial and banking sector).

Types of inflation:

Demand-pull inflation is generated by an excess of aggregate demand compared to the real volume of production (shortage of goods).

Supply (cost) inflation - price increases are caused by an increase in production costs in conditions of underutilized production resources. Increasing unit costs reduces the volume of products offered by manufacturers at the existing price level.

Balanced inflation - the prices of various goods remain unchanged relative to each other.

Unbalanced inflation - the prices of various goods change in relation to each other in different proportions.

Projected inflation is inflation that is taken into account in the expectations and behavior of economic entities.

Unpredicted inflation comes as a surprise to the population, since the actual growth rate of the price level exceeds the expected one.

Adapted consumer expectations - changing consumer psychology. Often arises from the dissemination of information about future potential inflation. Increased demand for goods allows entrepreneurs to raise prices for these goods.

Suppression of inflation is characterized by external price stability with active government intervention. An administrative ban on raising prices usually leads to increasing shortages of those goods for which prices would have increased without government intervention, not only due to the initial increased demand, but also as a result of decreased supply. Government subsidization of price differences for producers or consumers does not reduce supply, but additionally stimulates demand.

Depending on the growth rate, there are:

creeping(moderate) inflation(price growth less than 10% per year). Western [ source not specified 25 days

] economists consider it as an element of normal economic development, since, in their opinion, slight inflation (accompanied by a corresponding increase in the money supply) is capable, under certain conditions, of stimulating the development of production and the modernization of its structure. The growth of the money supply accelerates payment turnover, reduces the cost of loans, and contributes to the activation of investment activity and the growth of production. The growth of production, in turn, leads to the restoration of equilibrium between the commodity and money supply at a higher price level.

The average inflation rate in EU countries in recent years has been 3-3.5%. At the same time, there is always a danger that creeping inflation will escape state control. It is especially great in countries where there are no proven mechanisms for regulating economic activity, and the level of production is low and is characterized by the presence of structural imbalances;

Galloping inflation

(annual price increase from 10 to 50%). It is dangerous for the economy and requires urgent anti-inflationary measures. Predominant in developing countries; Hyperinflation(prices are growing very quickly, according to different sources from tens to several thousand and even tens of thousands of percent per year). It arises due to the fact that to cover the budget deficit the government issues an excess amount of banknotes. It paralyzes the economic mechanism and causes a transition to barter exchange. Usually occurs during periods of war or crisis. The expression is also used chronic inflation

for long-term inflation.

Stagflation

The Keynesian model of economics shows that the economy can experience either unemployment (caused by a decline in production, hence a decrease in the demand for labor) or inflation (if the economy operates at full employment).

High inflation and high unemployment cannot exist at the same time.

The Philips curve was constructed by A.W. Phillips based on wages and unemployment data in Great Britain for the years 1861-1957.

Following the Phillips curve, the state can build its economic policy. The state, by stimulating aggregate demand, can increase inflation and reduce unemployment and vice versa.

The Phillips curve was completely true until the mid-70s. During this period, stagnation occurred (a simultaneous increase in inflation and unemployment), which the Phillips curve could not explain.