this video introduces you to concept of unemployment unemployment means a state of a person who is not able to find a job and he or she is willing to and actively seeking work that means if somebody is not looking for work we don't consider him as unemployed next thing that we need to look at is how do we actually measure and who is measuring unemployment rate unemployment statistics are measured by bureau of labor statistics based on a random household survey known as current population survey they do it every month and collect these statistics and release the data of what is the unemployment rates next thing that we have to look at is is there any changes how often um they compare it to the state versus overall country if you see united states unemployment rate in june 2019 that is 3.8 percent but if you actually look at california you can expect unemployment rate to be little bit higher 4.1 percent um that is because more people in california at any given time looking for work or actively seeking work as compared to rest of the nation that makes the unemployment rate look higher this has nothing to do with whether economy is doing good in california as compared to united states california economy doing may be doing better compared to united states still unemployment rate looks higher because lot more people are looking for work in california next thing that we want to look at is terms in measuring unemployment rate first thing that we have to look at is working age population that means if you consider entire population of united states from the population survey from that if you get rid of people under 16 years of age and people who are institutionalized rest of the population that's what we call working age population when you say institutionalized institutionalized means somebody who is in nursing homes or mental health facilities or correctional facilities or active duty were not actually part of our labor statistics that's why we call them as institutionalized um working age population who is actually there including two important groups one is labor force second one comes as not in labor force let's look at labor force labor force includes two more groups that is people who are employed employed means either full-time workers or part-time workers are unpaid family labor that means if if your family has a business and you are working for them not directly getting any pay still considered as employed according to bls unemployed we already find now whoever is actively looking for work but doesn't have any work there is a group called discouraged workers that means they are not working they are willing to work they are capable of working but they have given up looking for work they are considered as discouraged workers discouraged workers are not counted as unemployed um next thing we want to look at is working age population since it includes labor force plus not in the labor force want to look at labour force participation rate essentially if you take the labor force you want to look at what is the percentage of labor force that is actually in the working age that means you take labor force and you take it as a ratio of working age population that's what gives us labor force participation rate next thing that you want to look at is within the labor force we have unemployed and unemployed that means if you want to calculate unemployment rate again you do the same thing that means you need to look at how many people are unemployed and you take that as a ratio or percentage of labor force that's what comes as unemployment rate now let's look at some calculations here um suppose if the population is 267 million and the labor force is 136 and number of people measured as unemployed is 6.8 first thing that we are looking at is unemployment rate okay so our rate of unemployment rate of unemployment in this case is we have to take number of people unemployed and that one um sorry that one we have to look at as a ratio of labor force times 100 that means 6.8 over 136 times 100 that gives us a percentage of 5 percent that means in this case five percent is unemployment rate second one we are looking at is labor force participation rate here is the thing anytime we want to get labor force participation rate we need to first know how much is the working age population so that we can make the ratio but in this case we have given population but we don't have working age population that means we won't be able to calculate it you simply need to name an unknown okay so unless we know how much is the working age we won't be able to calculate labor force participation right now let's look at another question in this question i am giving entire details details about population population under 16 years institutionalized and so on first thing i am asking how much is the working age so what i do is i start with population population is divided into two groups here one is working age when you write it like this it makes it easier and the other side is under 16 years of age and also institutionalized so if you consider these two groups okay if you want to calculate working age population here is 1500 under 16 years is 60 and institutionalized is 300 if you want to calculate working age that is going to be 1500 minus 60 minus 300 that gives us 1140 okay so 1140 comes as size of the working gauge population here next thing that you want to look at is what is the size of the labor force so when you want to calculate size of labor force you take working age separate into labor force and second thing comes not in labor force so already we have working age 1140 from the previous slide and not in labor force it's given in the problem which is 450. if you want to calculate labor force you take working age minus not in labor force that gives us the number of people who are actually in the labor force here now let's look at number of people employed i start with the labor force labor force is divided into people employed and people who are actually unemployed i'm asking how many people are employed if labor force from the previous slide is 690 i'm giving unemployed here that is 69. so number of people employed is 690 minus 69 that gives us 602 621 people in this case are actually employed next one labor force participation rate labor force participation rate you take labor force and in this case you need to know working age population times hundred labor force we calculated a couple of slides back which is 690 and working age population we calculate before which is 1140 times 100 that gives us 60.52 percent is the labor force participation rate last statistic that we want to calculate here is official unemployment rate official unemployment rate is you take people who are actually unemployed a number of people who are unemployed over labor force times hundred number of people unemployed is 69 labor force we calculated as 690 times 100 that means for this economy the unemployment rate is 10 percent