What is the Natural Rate of Employment?

[Adam Smith]

Originally posted by Tingkai
How do you determine the technical change parameter?

You don't care about the technical change parameter, T, per se. What you really want to know is its annual rate of change, t, which is multifactor productivity. THIS post describes how to calculate multifactor productivity.

[snoopy369]

Originally posted by KrazyHorse
Basic definitions for VetLegion:

Labour force: the population greater than 15 years old either employed or looking for work

Unemployment rate: the number of people in the labour force looking for work divided by the total number of people in the labour force

Employment rate: the number of people 15 years and older who are employed divided by the total number of people 15 years and older

Participation rate: the number of people in the labour force divided by the total number of people 15 years and older

In other words, U+E < 100%

In fact, U+E/P = 100%

Do we use "15 and older" in the US, or is that just a canadian thing? It's been eight years for me since I last used this in a course, but I can't imagine anyone using 15+ and not being laughed off the floor (given that the participation rate form 15-17 in the US is very low) ... wouldn't that significantly mar the value of the statistic [if the participation rate of 18-55 were say 82% and the 15-18 rate were 15%]? (Not that 15-18 is a large percentage of the total, but still)

[snoopy369]

Oh, and b etor, talk however you want - but follow Cort's suggestions if you want to be taken seriously here, and not treated like a small child You'll find that the folk here are much older and more mature acting than the folk at Eventis [by design, of course, you'll find that those of us that post at both are much more immature by design over there, it's a great way to let off steam]...

That said, not everyone here acts maturely We just laugh at them and call them trolls, for that is what they are

[LordShiva]

WTF is Eventis?

[KrazyHorse]

Originally posted by snoopy369


Do we use "15 and older" in the US, or is that just a canadian thing? It's been eight years for me since I last used this in a course, but I can't imagine anyone using 15+ and not being laughed off the floor (given that the participation rate form 15-17 in the US is very low) ... wouldn't that significantly mar the value of the statistic [if the participation rate of 18-55 were say 82% and the 15-18 rate were 15%]? (Not that 15-18 is a large percentage of the total, but still)

It might be 16 and older, now that I think about it, but it should be equivalent across countries.

I think it dates back from a time when people entered the workforce at a much younger age...

[KrazyHorse]

Nope. 15

http://beginnersinvest.about.com/library/glossary/bldef-participationrate.htm

[BlackCat]

EU seems to use this definition :

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32000R1897:EN:HTML

Labour force survey: definition of unemployment

1. In accordance with the ILO standards adopted by the 13th and 14th International Conference of Labour Statisticians (ICLS), for the purposes of the Community labour force sample survey, unemployed persons comprise persons aged 15 to 74 who were:

(a) without work during the reference week, i.e. neither had a job nor were at work (for one hour or more) in paid employment or self-employment;

(b) currently available for work, i.e. were available for paid employment or self-employment before the end of the two weeks following the reference week;

(c) actively seeking work, i.e. had taken specific steps in the four week period ending with the reference week to seek paid employment or self-employment or who found a job to start later, i.e. within a period of at most three months.

For the purposes of point 1(c), the following are considered as specific steps:

- having been in contact with a public employment office to find work, whoever took the initiative (renewing registration for administrative reasons only is not an active step),

- having been in contact with a private agency (temporary work agency, firm specialising in recruitment, etc.) to find work,

- applying to employers directly,

- asking among friends, relatives, unions, etc., to find work,

- placing or answering job advertisements,

- studying job advertisements,

- taking a recruitment test or examination or being interviewed,

- looking for land, premises or equipment,

- applying for permits, licences or financial resources.

2. Education and training are considered as ways of improving employability but not as methods of seeking work. Persons without work and in education or training will only be classified as unemployed if they are "currently available for work" and "seeking work", as defined in points 1(b) and (c).

3. Lay-offs are classified as unemployed if they do not receive any significant wage or salary (significant is set at >=50 %) from their employer and if they are "currently available for work" and "seeking work". Lay-offs are treated as a case of unpaid leave initiated by the employer - including leave paid out of government budget or by funds (16th ICLS). In this case, lay-offs are classified as employed if they have an agreed date of return to work and if this date falls within a period of three months.

4. During the off-season, seasonal workers cannot be considered as having a formal attachment to their high-season job - because they do not continue to receive a wage or salary from their employer although they may have an assurance of return to work. If they are not at work during the off-season, they are classified as unemployed only if they are "currently available for work" and "seeking work", as defined in points 1(b) and (c).

And it seems also like most countries use that ICLS definition.

[KrazyHorse]

Yeah. The only real difference is that some countries (ahem...USA) do not regard reading newspaper advertisements as "actively seeking employment", whereas other countries do. This means that US unemployment figures should generally be revised ~1% higher in order to facilitate comparisons with those of other countries.

[The Mad Monk]

While the US government don't include reading newspaper advertisements as seeking employment per se, everyone who only does that but still wants an unemployment check lies about it, so practically it really does.

[KrazyHorse]

a) Unemployment insurance is not available to everybody. Those who don't qualify have no reason to lie.

b) I'm basing the 1% figure on a deliberate comparative study over a period of decades. They found that if they applied the less stringent form of the "actively seeking" definition to their survey then they got a level of unemployment ~1% higher than if they used the more stringent form.

This isn't to say that the US method is "wrong" per se, but that care needs to be taken before blindly assuming that unemployment figures between countries are comparable just because they both claim to use the ICLS definition. I provided a link to the paper I'm citing in a thread talking to DanS. AFAIK its results are not disputed.

[VetLegion]

KrazyHorse, you're so desperate to catch me making a mistake that it's pathetic to watch

You know, like a fan wanting some atention but not getting it? Since I want to be generous, here's one mistake for you. It's hidden somewhere in this post, no doubt you will notice it after some work. That shall be your reward for trying hard

[KrazyHorse]

Originally posted by VetLegion
KrazyHorse, you're so desperate to catch me making a mistake that it's pathetic to watch

Vetty, honey, your mistakes are blaringly obvious. I don't need to search for them at all.