ABSTRACT
With the dramatic rise in unemployment in the Great Recession of 2007-2009 has come a renewed interest in understanding both the measurement andmore importantly-the causes of unemployment. As noted in chapter 2, the population can be divided into those people who are in the labor force ( L ) and those who are not ( N ). The labor force consists of those people who are employed ( E ) and those who are unemployed but would like to be employed ( U ). The concept of unemployment is somewhat ambiguous, since, in theory, virtually anyone would be willing to be employed in return for a generous enough compensation package. Economists tend to resolve this dilemma by defi ning unemployment in terms of an individual’s willingness to be employed at some prevailing market wage. Government statistics take a more pragmatic approach, defi ning the unemployed as those who are on temporary layoff waiting to be recalled by their previous employer, or those without a job who have actively searched for work in the previous month (of course, “actively” is not precisely defi ned).
