Indicators and measurement Indicators and measurement for performancefor performance

Gene ChangGene Chang

Economic stabilityEconomic stability

Job opportunities: measured by the unemployment rateJob opportunities: measured by the unemployment rate

Stable prices: measured by the inflation rateStable prices: measured by the inflation rate

Major indicatorsMajor indicators

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 Unemployment rate in the recent U.S. history U.S. history

0

5

10

15

20

25

30

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 LDCsMigrant workers in LDCs

in informal sectorsin informal sectors

Taking part time jobsTaking part time jobs

““floating population”floating population”

Case in China: A peasant worker in BeijingCase in China: A peasant worker in Beijing– http://bbs.news.qq.com/b-http://bbs.news.qq.com/b-

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