Labor Economics

Overview


Employment Data

Modeling


The supply and demand for labor follows the normal rules of Supply and Demand, which determines the level of wages.



Measuring


The Labor Force (or work force) is defined to be the population that is currently employed or looking for employment. The unemployed is equal to the individuals within the labor force who are currently not working. The uemployement rate is defined to be the ratio of the number of unemployed workers to the total labor force.
{% Unemployemnt \; Rate = \frac{Unemployed}{Labor Force} %}
The participation rate is the percentage of individuals in the population who are part of the work force.
{% Participation \; Rate = \frac{Labor Force}{Population} %}


Changes in the labor force and unemployment rate can occur through the following flows:

  • New individuals enter the work force
  • Individuals can exit the work force either by retiring, dying or decidinng to quit looking for work
  • Unemployed individulas in the work force can be hired.
  • Employed individuals in the work force can be fired.

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