Interpretation of the most detailed unemployment rate data

unemployment rate

Interpretation of the most detailed unemployment rate data

Unemployment rate refers to the number of unemployed labor force among the employed population who meet all employment conditions for a certain period of time. It aims to measure the idle labor capacity and is the main indicator reflecting the unemployment status of a country or region.

Monthly changes in unemployment data can appropriately reflect economic developments. Unemployment rate and economic growth rate have an inverse corresponding change relationship. In 2013, for the first time, China released relevant data on the surveyed unemployment rate.

unemployment rate

overview

The unemployment rate (unemployment) is interpreted as "Unemployment occurs when people are without work and actively seeking work" in English, translated as people who have no job and are actively looking for work (people who have no job and have not tried to find a job in the previous 4 weeks, Not listed here. Source: "Macroeconomics (Seventh Edition)") as a percentage of the total working people (except children, the elderly, unable to work), which can also be translated as the unemployment rate. It is an important indicator of the capital market and belongs to the category of lagging indicators. An increase in the unemployment rate is a signal of economic weakness, which can lead the government to loosen monetary policy and stimulate economic growth; on the contrary, a decrease in the unemployment rate will lead to inflation, which will cause the central bank to tighten monetary policy and reduce money supply. The US Department of Labor announces on the first Friday of each month, and investors in the market pay close attention to it.

In addition, the opposite of the unemployment rate figure is the employment figure (The Employment Data), the most representative of which is the non-agricultural employment data. The non-agricultural employment figure is an item in the unemployment figure. This item mainly counts the changes in positions other than agricultural production. It can reflect the development and growth of the manufacturing industry and the service industry. into depression. When the social economy is faster, consumption will naturally increase, and jobs in consumer and service industries will also increase. When non-agricultural employment figures increase significantly, in theory, it should be beneficial to the exchange rate; otherwise, the opposite is true. Therefore, this data is an important indicator for observing the degree and status of socio-economic and financial development.

Interpretation of the most detailed unemployment rate data

formula

Unemployment rate% = number of unemployed people / (number of employed people + number of unemployed people)%

In the United States, the unemployment rate is released on the first Friday of every month. In Taiwan, it is announced on the 23rd of each month by the Accounting Office of the Executive Yuan. Monthly changes in unemployment data can appropriately reflect economic developments. Most data are seasonally adjusted. The unemployment rate is considered a lagging indicator.

This indicator can be used to determine the employment situation of the entire labor force within a certain period of time. For a long time, the unemployment rate figure has been regarded as an indicator reflecting the overall economic situation, and it is the first economic data published every month, so the unemployment rate indicator is called the "crown jewel" of all economic indicators. It is the most sensitive monthly economic indicator in the market. How to interpret this indicator? Under normal circumstances, a decline in the unemployment rate represents the healthy development of the overall economy, which is conducive to currency appreciation; a rise in the unemployment rate represents a slowdown in economic development and recession, which is not conducive to currency appreciation. If the unemployment rate is combined with the inflation indicators of the same period to analyze, we can know whether the economic development was overheated at that time, whether it will cause pressure to raise interest rates, or whether it is necessary to cut interest rates to stimulate economic development.

Interpretation of the most detailed unemployment rate data

Type division

cyclical unemployment

The level of employment depends on the level of national income, and the level of national income depends on the aggregate demand. Cyclical unemployment is the cyclical unemployment caused by insufficient aggregate demand, and generally occurs in the depression stage of the economic cycle.

natural unemployment

The employment state when cyclical unemployment is eliminated is full employment, and the unemployment rate when full employment is realized becomes the natural unemployment rate.

hidden unemployment

People who have jobs on the surface but do not actually contribute to production, that is, people who have "jobs" but no "work".

Interpretation of the most detailed unemployment rate data

Cause of

Frictional

Frictional unemployment: refers to the unemployment phenomenon when people are looking for a job or changing jobs. Increased vocational training programs and improved communication (so that the unemployed can actually identify employment opportunities) can reduce unemployment in this area.

In the actual labor market, the unemployment rate always fluctuates around the natural rate of unemployment. One reason is that it takes time for workers to find the most suitable jobs. It is temporary unemployment caused by changes in various factors in economic operation and functional defects in the labor market. The economy is always in flux, it takes time for workers to find jobs that best suit their tastes and skills, and a certain amount of frictional unemployment is inevitable. Unemployment is the time elapsed between when a worker wants a job and when he gets it.

structural

Structural unemployment: Refers to unemployment caused by market competition or changes in production technology. Structural unemployment tends to last longer than frictional unemployment because it often means that people need to retrain or migrate to find jobs.

Every change in the economic industry requires that the labor supply can quickly adapt to the change, but the structural characteristics of the labor market do not match the social demand for labor. The resulting unemployment is called "structural unemployment". Structural unemployment is mainly due to changes in the economic structure (including industrial structure, product structure, regional structure, etc.) Unemployment caused by regional distribution that does not adapt to this change and does not match market demand. Structural unemployment is long-term in nature and often originates on the demand side for labour. Structural unemployment results from economic changes that cause the demand for a particular type of labor in a particular market and region to be relatively lower than its supply.

seasonal

Seasonal unemployment: Agriculture, construction and tourism are particularly vulnerable to seasonal factors. Seasonal unemployment is a kind of natural unemployment, which has two adverse effects on society: one is that the income of seasonal employees is affected due to the short employment time (although there is a compensatory wage difference); the other is that seasonal unemployment is not conducive to Efficient use of labor resources.

Career guidance for the seasonally unemployed should focus on information services and guide them to temporary employment in a flexible form (such as part-time work) during the off-season.

periodically

Cyclical unemployment: short-term unemployment caused by insufficient aggregate demand, generally occurring in the depression phase of the economic cycle. The cause of cyclical unemployment is primarily a decline in the overall level of the economy; since it is inevitable, cyclical unemployment is the last thing people want. Unemployment during the Great Depression in the 1930s was entirely cyclical. Every worker does what they have always done, so there is no frictional unemployment. Structural unemployment is also very inconspicuous compared with the unemployment caused by people's tendency to hold money instead of consumption, and when companies are forced to cut output.

Cyclical unemployment is different from structural unemployment, frictional unemployment and other unemployment conditions. The cyclical unemployment has a large number of unemployed people and is widely distributed. It is the most severe situation in economic development, and it usually takes a long time to recover. As China's economy is still in the stage of rapid development, the probability of severe economic recession and cyclical unemployment in China in the past and in the next few decades is very low.

unwilling

Involuntary unemployment: If the price of wage-goods rises slightly relative to money, the aggregate supply of labor willing to work at the prevailing money wage and the aggregate demand for labor at that wage will both decrease is greater than the existing employment, then the laborer is in a state of involuntary unemployment. It is a concept proposed by the British economist Keynes in his book "The General Theory of Employment, Interest and Money" in 1936.

Keynes believed that if the price of wage goods rises slightly compared to money wages, laborers are willing to provide labor supply under the current money wages, and at the same time the total labor demand is greater than the existing employment, then there will be involuntary unemployment exist.

Interpretation of the most detailed unemployment rate data

Cause of

Cause of

Unemployment rate The unemployment rate indicator can be used to judge the employment situation of the entire working population within a certain period of time. It is generally believed that frictional unemployment, structural unemployment and voluntary unemployment are unavoidable, and they have nothing to do with the aggregate demand level of the economy and society, and have nothing to do with the economic cycle. Therefore, they are also collectively referred to as natural unemployment. The ratio of natural unemployment to total labor is the natural rate of unemployment. The natural unemployment rate is generally considered to be difficult to eliminate in the economy and society, because frictional unemployment, structural unemployment and voluntary unemployment always exist, and it has nothing to do with cyclical unemployment, economic operation cycle and aggregate demand level, so it is relatively stable is the lowest unemployment rate that a country can sustain in the long run. When there is no cyclical unemployment in the economy, and all unemployment is frictional, structural, seasonal and voluntary unemployment, the economy is considered to have reached full employment, that is, social employment after the elimination of involuntary unemployment or cyclical unemployment situation. Therefore, it can be said that the unemployment rate at full employment is the natural rate of unemployment. Full employment not only means the full use of a country's labor resources, but also means the full use of all economic resources in a country. When the actual unemployment rate is equal to the natural unemployment rate, a country's economy is in a long-term equilibrium state, and all economic resources have been fully utilized, that is, full employment equilibrium has been achieved.

Interpretation of the most detailed unemployment rate data

Existence relationship

Natural rate of unemployment: the rate of unemployment at full employment

It is the sum of frictional unemployment rate and structural unemployment rate. Due to factors such as changes in population structure, technological progress, and changes in people's consumption preferences, there will always be frictional unemployment and structural unemployment in society. In the long run, the unemployment caused by the economic cycle will often disappear without a trace, leaving only natural unemployment in society. The definition of "natural" is not clear, and no one can clearly point out the natural unemployment rate of a society. It will change with changes in population structure, technological progress, and industrial upgrading. In Taiwan, it is generally believed that the natural unemployment rate is between 1.5% and 2.5%.

Phillips curve

The Phillips curve shows the relationship between the economic growth rate and the price increase rate, which can be called the "output-price" Phillips curve. This is commonly used by many economists later. This Phillips curve replaces the unemployment rate in the second Phillips curve with the economic growth rate. This substitution is achieved through "Okun's Law".

American economist Okun proposed in 1962 that the unemployment rate and the economic growth rate have an inverse corresponding change relationship. In this way, the economic growth rate and the price increase rate show a corresponding change relationship in the same direction. In the study of this relationship, the economic growth rate index is often not directly used, but the "deviation of the actual economic growth rate from the potential economic growth rate" or the "deviation of the actual output level from the potential output level". . This "deviation" indicates the gap between total social supply and demand and the pressure of rising prices within a certain period of time.

The actual economic growth rate indicates the output growth determined by the total social demand within a certain period, while the potential economic growth rate indicates the human, material, financial and other resources of the society can provide within a certain period of time and at a certain level of technology. The state of aggregate supply. Potential economic growth rate can have two meanings: one refers to the normal potential economic growth rate, that is, the economic growth rate that can be realized when various resources are fully utilized normally; the other refers to the maximum potential economic growth rate , that is, the economic growth rate that can be realized when various resources are fully utilized to the maximum extent.

The first meaning is used here. The expression form of this Phillips curve is: on the coordinate chart with the deviation of the actual economic growth rate from the potential economic growth rate as the horizontal axis and the price increase rate as the vertical axis, a curve with a positive slope slopes from the lower left to the upper right. a curve. The trend of this curve is just opposite to the first and second Phillips curves. This curve shows that the deviation of the actual economic growth rate from the potential economic growth rate and the price increase rate are in the same direction, that is, a positive correlation. When the deviation of the actual economic growth rate from the potential economic growth rate increases, the price increase rate also increases; when the deviation of the actual economic growth rate from the potential economic growth rate decreases, the price increase rate also decreases. In a round of short-term, typical economic cycle fluctuations, during the rising period of economic fluctuations, with the expansion of demand, the deviation of the actual economic growth rate from the potential economic growth rate increases, and the price increase rate increases accordingly; during the economic fluctuations During the fall period, as the demand shrinks, the deviation of the actual economic growth rate from the potential economic growth rate decreases, and the price increase rate decreases accordingly. In this way, the curve appears as a curve loop that first moves from the lower left to the upper right, and then from the upper right to the lower left. This curvilinear loop presents a slightly upward-right sloping, low-potential, and flattened shape. "Sloping upward to the right" indicates that the deviation of the actual economic growth rate from the potential economic growth rate is in the same direction as the rate of price increase; "low potential" indicates that the rate of price increase is at a relatively low level; Square slope and "relatively flat", indicating that the price increase rate has not changed much.