What is a true unemployment rate?
Normally in the U.S. the unemployment rate is measured by the number of people filing for and receiving unemployment compensation. However, many failed to find employment before their unemployment compensation expired, or they had to settle for part-time employment or a job that pays less than that for which they are trained and experienced. The determination of the true unemployment rate involves the endeavor to count those people as well.
The Official Unemployment rate (U-3) in US for August 2011 was 9.1. Below are the other unemployment rates in US for August 2011 : U-1 Unemployment rate : 5.4 U-2 Unemployment rate : 5.3 U-3 Unemployment rate : 9.1 U-4 Unemployment rate : 9.7 U-5 Unemployment rate : 10.6 U-6 Unemployment rate : 16.2
Natural Rate of Unemployment -The natural rate of unemployment is unemployment that does not go away on its own even in the long run. -It is the amount of unemployment that the economy normally experiences.Cyclical Unemployment -Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate. -It is associated with with short-term ups and downs of the business cycle.
The natural rate of unemployment is the rate that holds over the long-run in equilibrium. In Classical economics, this rate is 0%. With other assumptions, such as frictional and structural unemployment, you will get a natural unemployment rate above 0%. Source: http://www.transtutors.com/homework-help/macro-economics/unemployment/full-employment/
to calculate the labor force participation rate use the equation: LFP = CLF/ CNIP -- meaning labor force participation is calculated by dividing the civilian labor force by the civilian non-institutional population. as for the unemployment rate use: unemployment rate = unemployment/ CLF and for the employment rate use: employment rate = employment/ CNIP