Indicators and measurement
for performance
Gene Chang
Major indicators
Economic stability
Job opportunities: measured by the unemployment rate
Stable prices: measured by the inflation rate
Employment and job opportunities
How to measure unemployment rate
Number of unemployed / labor force
Labor force = # of unemployed + # of
employed
Definition of unemployed
Definition of employed
Employment and job opportunities
“discouraged workers”
Under estimate the severity of
unemployment in the economic recession
Unemployment 6
Employment and job opportunities
The unemployment number that is most often used in the media
(and by the government) is known as the "U-3".
The "U-6" is considered to be a broader measure of the
unemployment situation in the United States.
The "U-6" includes two groups of people that the "U-3" does not:
"Marginally attached workers" - people who are not actively looking
for work, but who have indicated that they want a job and have
looked for work (without success) sometime in the past 12 months.
This class also includes "discouraged workers" who have
completely given up on finding a job because they feel that they just
won't find one.
People who are looking for full-time work but have to settle on a
part-time job due to economic reasons. This means that they want
full-time work, but can't find it.
The "official" unemployment number is the "U-3" - this was 8.1% in
February. The "U-6" was an eye-opening 14.8% in February.
Employment and job opportunities
Employment and job opportunities
The inherent instability of a free market
system.
Creating the business cycle of an
economy
The Keynesian solution
Government intervention
“Mixed economy”
Unemployment rate in the recent
U.S. history
30
25
20
15
10
5
19
29
19
50
19
70
19
74
19
78
19
82
19
86
19
90
19
94
19
98
20
02
20
06
0
The growth rate of U.S. real GDP since 1870
9
Unemployment by country
Data from the Excel table: List of
unemployment rates by countries
Least Developed countries
The U.S. and Hong Kong
Western European welfare states
Countries with different labor laws
Central Planned economies
Least developed countries
Surplus labor
Lewis theory: unlimited labor supply
Huge unemployed in urban areas, but
many worked in the urban informal sector
Huge under employed in rural areas
The U.S. and Hong Kong
Developed countries with liberal labor laws
Low unemployment rate
But job switch by employees is common
and often.
Western European countries
Most Western European countries and
Canada
Welfare state
Generous unemployment compensation
Countries by different labor laws
French model: Dismissal by good causes
– France, Sweden
– Many Southern American countries
The U.S. model: at Will
– Hong Kong
– Denmark
Unemployment by country
The Japanese model
– Japan
Taiwan
South Korea
Centrally Planned Economies
Lower unemployment
The state guarantees jobs for everybody
Surplus labor within the factories, 30-80%
of workers could be redundant in the firms
Underemployment and disguised
unemployment
Migrant workers in LDCs
in informal sectors
Taking part time jobs
“floating population”
Case in China: A peasant worker in Beijing
– http://bbs.news.qq.com/b1001024026/28500.htm