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The Global Economy - Essay Example
Based on the process undertaken by the Bureau of Labour and Statistics (BLS) (2006), the first stage is to classify individuals into three categories: employed, unemployed, and out of the labour force. For an individual to belong in a certain category, criteria have to be satisfied…
It has to be noted that the students and other individuals out of the labour force are excluded from the computation.
According to the BLS (2006) there are several constraints that affect the accurate computation of unemployment rate. The agency cited four important considerations that can affect the outcome of such calculation. First, the computation for the unemployment rate is manifested through surveys. Personnel from the BLS queries individuals on their employment status through guidelines presented in the survey. The truthfulness of the gathered data is a concern because some individuals tend to provide false information. Second, the presence of underemployed individuals is an important aspect. Definitely, underemployed individuals can be classified as both employed and unemployed. It is important though to correctly classify their contribution to the employment rate. Third, unprecedented economic events affect unemployment rate. It is critical to identify the different economic circumstances that can instantly change the rate of unemployment. Finally, the instruments used by BLS have to be updated and conform to the new standard that ensures accurate computations. Time changes the situation and logically affects the method in which calculation for the unemployment rate is approached. ...