GRADUATE MACROECONOMICSGADJAH MADA UNIVERSITY

UNEMPLOYMENT ANDINFLATION (Macroeconomics : Mankiw)

PRESENTED BY :ARFAN ARYANTO DALIMUNTHEROHMAD ADI SIAMAN

LABOR FORCE = EMPLOYED + UNEMPLOYED

Rate of unemployment (U) = Unemployed / Labor Force

NATURAL RATE OF UNEMPLOYMENT

UNEMPLOYMENTNATURAL RATE OF UNEMPLOYMENT

FRICTIONAL UNEMPLOYMENT

STRUCTURAL UNEMPLOYMENT

CYCLICAL UNEMPLO

YMENT

f x unemployed = s x employed

Previous equation : Rate of unemployment (U) = Unemployed / Labor Force

Where :f: the percentage of unemployed individuals who find jobss: the percentage of employed workers who separate from jobs

Natural Rate of Unemployment

Demographics

Public Policy Technological Change

Sectoral Shifts

OKUN’S LAW

Unemployment Real GDP

2%

1%

U - Un =- 0.5 x (Y - YP)Where:U= Actual unemployment rateUn=Natural rate of unemploymentY=Actual GDPYP=Potential GDP

MACROECONOMIC’S POLICY IN UNEMPLOYMENT

Unemployment Insurance

Minimum Wage Laws

Min

imum

Wag

e La

ws

• Higher Income (+)• Teenage With Minimum Wage (-)

Reducing Hardship (+)

Higher Unemployment (-)

THANK YOU