8) Looking for a job Flashcards
Labour input eq?
hours per worker x workers per capita
Preferences for working less correlation for larger government?
-positive correlation
-correlation not causation
Employment / population?
(labour force / population ) x (1 - Unemployed/ labour force)
Unemployment / labour force?
-unemployment rate
Unemployment definition?
number of people that able to work and actively seeking work.
How do we view unemployment?
-like a flow
-stock flow model
At steady state, what is change in unemployment rate?
-0
What is steady state unemployment rate?
u* = b+s / b+s+f
When u > u* what does it mean?
- mathematically : change in u is negative so goes back to steady state
Why does steady state not depend on d?
-as people exit labour force and unemployment at the same time
What determines f (job finding rate)?
- vacancies
-intensity of search
-ease of matching
What is Beveridge curve?
-links unemployment to job vacancies
-Captures labour market efficiency (matching workers to jobs)
-shifts with efficiency
When does Beveridge curve shift to the right?
- higher b
-higher s
-lower i
-lower m
What happens to Beveridge curve longer you are unemployed?
- i falls
- m falls as skills mismatch with current demand
-shifts to right
What is job creation curve?
-Describes how firms decide to create job vacancies based on expected profitability
What happens to job creation curve with higher unemployment?
-more vacancies
-as lower wages
-easier to find worker
When does job creation curve shift right?
-less demand of labour by firms
-e.g. Productivity of labour falls
-bargaining power rises
-cost of posting vacancies
What does intersection of BC and JCC represent?
-equilibrium in labour market
-steady state unemployment rate where inflow = outflow (balance between job seekers finding jobs and firms filling vacancies)
-Vacancies align with the matching efficiency of the labor market.
What do we think of unemployment here compared to previously?
-frictions
-not perfect substitutes
