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Classification of labor market status:

• employed (working population):
  • perform some work for pay or profit
  • had a job but ill, on leave, on strike, or not working due ot mechanical breakdown or bad weather
  • include employers, employees, the self-employed, and unpaid family workers
• unemployed:
  • people who are not employed and who are available for work and have looked for work
  • in Hong Kong, the unemployed includes "discouraged workers" who did not seek work because they believe work is not available

Some important ratios:

• unemployment rate = unemployed / labor force = 171,100 / 3,571,800 = 4.8%
• labor force participation rate = labor force / relevant population = 3,571,800 / 5,836,300 = 61.2%
• employment rate = employed / relevant population = 3,400,700 / 5,836,300 = 58.3%

Things to note:

• The distinction between economically inactive (out of labor force) and unemployed is often quite fuzzy.
• employment rate = (1 - unemployment rate) * labor force participation rate. If labor force participation rises while unemployment is rising, the employment rate and the unemployment rate may go up at the same time.
• Net changes in the stock of people in these labor market categories are small relative to the gross flows.
• This simple classification does not consider other important aspects of labor supply behavior, such as work hours, effort, and labor market skills.

Different concepts of wages:

• for a worker hired on an hourly basis, annual earnings = hourly wage x numbers of hours worked in a year
• his total compensation = earnings + fringe benefits
• his total income = total compensation + unearned income
• the employer's labor cost = total compensation + employment taxes (e.g., MPF contributions)
• real wage = nominal wage / price index

Question: Suppose you plot wage on the horizontal axis, and yearly earnings on the vertical axis, what will be the shape of the graph?

For your interest:

• Median employment earnings by educational attainment
• Distribution of monthly employment earnings

Industry and Occupation Classification:

• Industry refers to the main kind of goods or services produced by the establishment in which a person worked.
• Occupation refers to the kind of work a person performed.

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Lecture Notes