Ch. 11 Unemployment & Labor Force Participation

Question 1

What is the working age population?

Answer 1

The number of people 16 years and older who are not in the military or institutionalized

Question 2

Unemployed definition

Answer 2

Adults who do not have a job but are looking for work

Question 3

Labor force definition

Answer 3

all workers, employed plus unemployed

Question 4

Unemployment rate definition and equation

Answer 4

% of labor force without a job

(unemployed/labor force)x100

Question 5

Who are discouraged workers? Are they considered unemployed?

Answer 5

workers who have given up looking for work, but who would still like one; not counted as unemployed

Question 6

Involuntary Part-time workers

Answer 6

Workers who are working part-time but would like a full time job

Question 7

Underemployment rate

Answer 7

alternative BLS measure that adds discouraged works and the involuntary part time workers to the official unemployment rate (doesn’t measure quality of jobs or how well people are matched to their jobs

Question 8

Frictional Unemployment Definition? Created by? Large share of?

Answer 8

Short term unemployment caused by difficulties of matching employee to employer; created by scarcity of info; large share of total unemployment

Question 9

Structural Unemployment definition

Answer 9

Persistent, long term unemployment caused by long lasting shocks or permanent changes in the economy such as new info technology and globalization

Question 10

What happens if structural unemployment last long enough?

Answer 10

unemployment can become chronic

Question 11

What is cyclical unemployment and its causes?

Answer 11

Unemployment that is correlated with the business cycle caused by non keynesians and keynesians

Question 12

What is a non keynesian?

Answer 12

caused by real socks that require a reallocation of resources

Question 13

Keynesians

Answer 13

Caused by deficiencies in aggregate demand; mismatch between the aggregate level of wages and the level of prices

Question 14

Natural unemployment rate

Answer 14

structural plus frictional unemployment

Question 15

Labor force participation rate (LFPR) definition and equation

Answer 15

The % of the adult non-institutionalized civilian population who are working or actively looking for work.
(labor force/adult population)x100

Question 16

What are some incentives?

Answer 16

1. Taxes and Benefits - taxes discourage work and benefits encourage non-work
2. retirement- many countries penalize workers who work past the normal early retirement age