Unemployment and Inflation (Resume from chapter of the books Macroeconomics by Mankiw)

1. GRADUATE MACROECONOMICS
GADJAH MADA UNIVERSITY
UNEMPLOYMENT AND
INFLATION
(Macroeconomics : Mankiw)
PRESENTED BY :
ARFAN ARYANTO DALIMUNTHE
ROHMAD ADI SIAMAN

2. LABOR FORCE = EMPLOYED + UNEMPLOYED
Rate of unemployment (U) =
Unemployed / Labor Force
NATURAL RATE OF
UNEMPLOYMENT

3. UNEMPLOYMENT
NATURAL RATE OF
UNEMPLOYMENT
FRICTIONAL
UNEMPLOYMENT
STRUCTURAL
UNEMPLOYMENT
CYCLICAL
UNEMPLOY
MENT

4. f x unemployed = s x employed
Previous equation :
Rate of unemployment (U) = Unemployed / Labor Force
Where :
f: the percentage of unemployed individuals who find jobs
s: the percentage of employed workers who separate from jobs

5. Natural Rate of
Unemployment
Demographics
Public Policy
Technological
Change
Sectoral Shifts

6. OKUN’S LAW
Unemployment
Real GDP
2%
1%

7. U - Un =- 0.5 x (Y - YP)
Where:
U= Actual unemployment rate
Un=Natural rate of unemployment
Y=Actual GDP
YP=Potential GDP

8. MACROECONOMIC’S POLICY IN
UNEMPLOYMENT
Unemployment
Insurance
Minimum
Wage
Laws

9. MinimumWage
Laws
• Higher Income (+)
• Teenage With Minimum Wage (-)

10. Reducing
Hardship (+)
Higher
Unemployment (-)