Labor Force Participation Rate and Unemployment Rate
Such indicators of economic development as the labor force rate and the unemployment rate are the significant aspects of state development and its policies regarding the labor market. Based on the findings obtained from the analysis of information provided by the United States Department of Labor (n.d.), at the moment, the US labor force participation rate is 63%. Over the past twenty years, this parameter has decreased by 4%, which indicates the lack of effective work on this issue (United States Department of Labor, n.d).
Also, the U-3 and U-6 unemployment rates are essential indicators. At the end of 2017, their numbers were 4.1% and 8.1%, respectively (United States Department of Labor, 2018). The difference between these figures is that the U-3 displays information about those unemployed who could potentially be involved in the labor system, and U-6 is associated with the marginal segments of society who do not intend to participate in the country’s economy. According to Mankiw (2016), the most significant factor associated with the unemployment rate is low income. With regard to the labor force participation rate, the need to provide basic needs is the main driver determining this category.
Normal Rate of Unemployment
The labor market analysis provides an opportunity to highlight such a concept as the normal rate of unemployment. As Mankiw (2016) notes, this indicator is an average value that is closely related to that of the labor force rate. With regard to the American economy, according to the author, in 2015, the indicator under consideration was 4.9%, which was close to the real unemployment rate of 5.3% (Mankiw, 2016, p. 581).
The importance of such a criterion is that it reflects the current situation regarding the involvement of potential labor in the economy and the participation of certain segments. While having information about this aspect, it is possible to control the growth or decline in the number of workers and take appropriate measures aimed at stimulating the provision of jobs. Otherwise, there is a serious threat of crisis caused by surplus vacancies and other economic challenges.
Cyclical Unemployment
The concept of cyclical unemployment may be seen clearly enough on the example of the American labor market. According to the United States Department of Labor (2018), the dynamics of the population involved in the economy through employment have been quite high over the past twenty years. Mankiw (2016) claims that cyclical unemployment is the “deviation of unemployment from its natural rate” (p. 581). In other words, the situation is constantly changing, and it is difficult to make any predictions or make plans for interventions.
In addition, cyclical unemployment is a significant obstacle to the sustainable progress of government goals and objectives due to the inability to rely on stable incomes. If different data of people’s involvement in the labor market appear constantly, it will complicate the process of correcting the situation since it will be difficult to find the exact cause of the problem. As a result, cyclical unemployment is a significant aspect of the economic situation in the country.
Research Assignment
The assessment of the unemployment rate is one of the tools for analyzing countries’ economic development and their sustainability. Canada will be taken as one of the states that play a significant role in the international arena. The analysis of its unemployment rate, the stability of the local currency, and the characteristics of trade relations will provide a detailed picture of the country’s economic development.
Unemployment Rate
When comparing the degree of unemployment in Canada and the United States, it can be noted that in the former country, this indicator is lower. According to the chart provided by Hoffmann and Lemieux (2016), Canada has been able to improve its performance and beat its southern neighbor. Although both countries have a good position regarding this aspect, Canada’s positive dynamics are more noticeable than that of the United States.
Canada’s Currency
Canada has its unique dollars as a single national currency. According to the official data, in relation to the US dollar, the local exchange rate is about 1.3/1, which indicates the sufficient stability of the Canadian money (“Canadian dollar,” 2019). Throughout the country’s history, its exchange rate has been both floating and fixed, and today, the Canadian dollar is a floating currency with a stable background.
Trading Partners
Canada’s trade contacts are quite strong with both nearby and distant states. As Xie, Gao, Grant, and Anders (2018) argue, the country actively interacts with the USA, China, Argentina, Brazil, and other major market participants. As noted in the official sources, “71% of the GDP is accounted for by the service industry,” and about 47.970 local millions are accounted for export (“Canadian dollar,” 2019, para. 2).
General Assessment
When assessing the levels of unemployment, inflation, and trade considered previously, Canada is the country with a stable growing economy and develops actively enough. The local GDP indicates that the state does not have crucial problems, and compared with the US, its labor market is more sustainable. The stability of the Canadian currency proves that the financial system of the country does not experience significant difficulties, and further development is natural and logical.
References
Canadian dollar. (2019). Web.
Hoffmann, F., & Lemieux, T. (2016). Unemployment in the Great Recession: A comparison of Germany, Canada, and the United States. Journal of Labor Economics, 34(S1), S95-S139. Web.
Mankiw, N. G. (2016). Principles of economics (8th ed.). Boston, MA: Cengage Learning.
United States Department of Labor. (2018). U-3 unemployment rate was 4.1 percent in December 2017; U-6 was 8.1 percent. Web.
United States Department of Labor. (n.d.). Civilian labor force participation rate. Web.
Xie, C., Gao, J., Grant, J. H., & Anders, S. (2018). Examining the Canada-China agri-food trade relationship: Firms, trading partners, and trading volumes. Canadian Journal of Agricultural Economics/Revue Canadienne D’agroeconomie, 66(4), 539-555. Web.