All Subjects



AP Macro



Unit 2

2.3 Unemployment

2 min readnovember 15, 2020

Jeanne Stansak


Caroline Koffke

2.3: Unemployment


  • Labor force—anyone 16 years of age or older that is willing and able to work. Workers cannot be in the military, a full-time student, retired or institutionalized.
  • Unemployment rate—the percentage of unemployed workers in the total labor force. It is calculated by dividing the number of unemployed by the total number of people in the labor force.
  • Labor force participation rate—a measure of an economy's active workforce. It is calculated by taking the total number of workers employed or actively seeking employment and dividing by the total number of the non-institutionalized, civilian working-age population.
  • The natural rate of unemployment—the total amount of frictional and structural unemployment
  • Frictional unemployment—workers who are temporarily unemployed or currently in between jobs. A specific type of frictional unemployment is known as seasonal unemployment. Seasonal unemployment is a type of frictional unemployment that defines particular types of jobs that can only be done during a certain time of the year. Construction workers in the northern states are considered seasonal during the winter. Lifeguards are another example of seasonal unemployment as they are typically only hired during the summer months.
  • Structural unemployment—workers who are unemployed because their skills have become obsolete (this means that the skill is no longer needed within the economy). A specific type of structural unemployment is technological unemployment. An example of technological unemployment would be where a company begins to use a machine to complete a production task instead of a worker.
  • Cyclical unemployment—workers who are unemployed because their jobs have been lost due to economic contraction. These jobs will return when economic conditions improve and grow.

Calculating the Unemployment Rate



Germany's unemployment rate in 2017 would be 10%. That is determined by dividing the 5 million that are unemployed by the 50 million that are in the labor force. Germany's unemployment rate in 2018 is 15%. That is determined by dividing the 15 million that are unemployed by the 100 million that are in the labor force.
Italy's unemployment rate in 2017 is 5%. That is determined by dividing the 8 million unemployed by the 160 million in the labor force. Italy's unemployment rate in 2018 is 7%. That is determined by dividing the 7 million unemployed by the 100 million in the labor force.

Types of Unemployment

Below are some examples of different scenarios related to different types of unemployment:

Was this guide helpful?

🔍 Are you ready for college apps?
Take this quiz and find out!
Start Quiz
FREE AP macro Survival Pack + Cram Chart PDF
Sign up now for instant access to 2 amazing downloads to help you get a 5
Browse Study Guides By Unit
Exam Skills: MCQ/FRQ
Unit 1: Basic Economic Concepts
Unit 3: National Income and Price Determination
Unit 4: Financial Sector
Unit 5: Long-Run Consequences of Stabilization Policies
Unit 6: Open Economy-International Trade and Finance
Join us on Discord
Thousands of students are studying with us for the AP Macroeconomics exam.
join now
💪🏽 Are you ready for the AP Macro exam?
Take this quiz for a progress check on what you’ve learned this year and get a personalized study plan to grab that 5!
Hours Logo
Studying with Hours = the ultimate focus mode
Start a free study session
📱 Stressed or struggling and need to talk to someone?
Talk to a trained counselor for free. It's 100% anonymous.
Text FIVEABLE to 741741 to get started.
© 2021 Fiveable, Inc.