28 Key Terms

Cyclical Unemployment

Unemployment closely tied to the business cycle, like higher unemployment during a recession.

Discouraged Workers

Those who have stopped looking for employment due to the lack of suitable positions available.


Currently working for pay.

Frictional Unemployment

Unemployment that occurs as workers move between jobs.

Labor Force

The number of employed plus the unemployed.

Labor Force Participation Rate

This is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job.

Natural Rate of Unemployment

The unemployment rate that would exist in a growing and healthy economy from the combination of economic, social, and political factors that exist at a given time.

Not in the Labor Force

Those who are not working and not looking for work, whether they want employment or not; also termed “out of the labor force.”

Structural Unemployment

Unemployment that occurs because individuals lack skills valued by employers.


Individuals who are employed in a job that is below their skills.


Out of work and actively looking for a job.

Unemployment Rate

The percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs. (1)


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