<p>Separation = #new redundancies/employed person
Job finding = #people entering employment/unemployed person</p>

CC BY-SA 4.0
2022-08-01T02:52:51.947Z
2022-08-01T02:52:51.947Z
juice
<p><strong>Job separation rate</strong> = newly unemployed in period <span class="math-container">$t$</span> as share of employed in period <span class="math-container">$t-1$</span>.</p>
<p><strong>Job finding rate</strong> = newly employed in period <span class="math-container">$t$</span> as a share of unemployed in period <span class="math-container">$t-1$</span>.</p>
<p>There are sometimes differences how these definitions are used, especially if a like-for-like comparison is required. In such cases the rates may be expressed as shares in the labor force (employed + unemployed) in period <span class="math-container">$t$</span>, or, less frequently, as shares in the working age population.</p>

CC BY-SA 4.0
2022-08-01T07:12:38.613Z
2022-08-01T07:12:38.613Z
BrsG
<p>On page 494, when discussing the natural rate of unemployment Mankiw states that the NRU is caculated by dividing job separation/job separation + job finding. See below:</p>
<p>&quot;The NRU can be viewed as the rate of unemployment the economy gravitates to, given the number of people losing jobs over a period and the number finding work over that same period. Unemployment is a dynamic process. At any period of time, there are people losing jobs (called job separation) and people finding jobs. Suppose that every month, the <strong>rate at which people lose jobs,</strong> denoted by the Greek letter <span class="math-container">$\alpha$</span>, is 4.9 per cent, <strong>and the rate at which people find jobs</strong> denoted by the Greek letter <span class="math-container">$\psi$</span>, is 65 per cent. <em>The NRU is found by taking the job separation rate and dividing this by the sum of the job finding rate and the job separation rate:</em>&quot;</p>
<p>What are these two measures ratios of? My gut feeling is:</p>
<ul>
<li>Separation = #new redundancies/total labour force</li>
<li>Job finding = #people entering employment/total labour force or perhaps #newly filled vacancies / total labour force</li>
</ul>
<p><strong>BUT</strong> In the example above from Mankiw, the job finding rate is 65%. This would seem to be close to a typical value for the employment rate (employed persons/population over 15yrs).</p>
<p>So to repeat my question, how do we define these two rates? Is &quot;job finding&quot; a synonym for employment rate?
Any help much appreciated.</p>
<p>Cheers</p>

CC BY-SA 4.0
2021-11-23T08:57:48.943Z
Just a guess: job finding could easily be #people entering employment/#people looking for employment.
Giskard
CC BY-SA 4.0
2021-11-24T13:41:13.690Z
Thanks, that seems like a logical idea. I find it really irritating that the textbook doesn't define this. It would seem to be key to understanding the concept.
Studi
CC BY-SA 4.0
2022-08-01T07:53:59.340Z
The given answers are correct. What book do you refer to exactly? Did you check the sections before? I would be surprised if there would be no definitions. E.g. [Mankiw Macroeconomics, 10th Edition](https://store.macmillanlearning.com/us/product/Macroeconomics/p/1319105998) defines it as such: "Let s denote the rate of job separation, the fraction of employed individuals who lose or leave their jobs each month. Let f denote the rate of job finding, the fraction of unemployed individuals who find a job each month.
AKdemy
<unemployment><natural-rate-unemployment>
Separation rate & job finding rate
Studi
# Separation rate & job finding rate

(Asked by: username_0 on 2021-11-23)

On page 494, when discussing the natural rate of unemployment Mankiw states that the NRU is caculated by dividing job separation/job separation + job finding. See below:

"The NRU can be viewed as the rate of unemployment the economy gravitates to, given the number of people losing jobs over a period and the number finding work over that same period. Unemployment is a dynamic process. At any period of time, there are people losing jobs (called job separation) and people finding jobs. Suppose that every month, the **rate at which people lose jobs,** denoted by the Greek letter $\alpha$, is 4.9 per cent, **and the rate at which people find jobs** denoted by the Greek letter $\psi$, is 65 per cent. *The NRU is found by taking the job separation rate and dividing this by the sum of the job finding rate and the job separation rate:*"

What are these two measures ratios of? My gut feeling is:

* Separation = #new redundancies/total labour force
* Job finding = #people entering employment/total labour force or perhaps #newly filled vacancies / total labour force

**BUT** In the example above from Mankiw, the job finding rate is 65%. This would seem to be close to a typical value for the employment rate (employed persons/population over 15yrs).

So to repeat my question, how do we define these two rates? Is "job finding" a synonym for employment rate?
Any help much appreciated.

Cheers

**Tags:** unemployment, natural-rate-unemployment
> **Comments:**
> **username_1**: Just a guess: job finding could easily be #people entering employment/#people looking for employment.  
> **username_0**: Thanks, that seems like a logical idea. I find it really irritating that the textbook doesn't define this. It would seem to be key to understanding the concept.  
> **username_2**: The given answers are correct. What book do you refer to exactly? Did you check the sections before? I would be surprised if there would be no definitions. E.g. [Mankiw Macroeconomics, 10th Edition](https://store.macmillanlearning.com/us/product/Macroeconomics/p/1319105998) defines it as such: "Let s denote the rate of job separation, the fraction of employed individuals who lose or leave their jobs each month. Let f denote the rate of job finding, the fraction of unemployed individuals who find a job each month.  

---

## 2 answers

### Answer by username_3 on 2022-08-01. Score: 3

Separation = #new redundancies/employed person
Job finding = #people entering employment/unemployed person


---

### Answer by username_4 on 2022-08-01. Score: 2

**Job separation rate** = newly unemployed in period $t$ as share of employed in period $t-1$.

**Job finding rate** = newly employed in period $t$ as a share of unemployed in period $t-1$.

There are sometimes differences how these definitions are used, especially if a like-for-like comparison is required. In such cases the rates may be expressed as shares in the labor force (employed + unemployed) in period $t$, or, less frequently, as shares in the working age population.


---

