Chapter 11- Unemployment Flashcards

1
Q

Unemployment

A

adults who do not have a job but are looking for work
must be an adult, not institutionalized, a civilian, and looking for work
equation= unemployed/unemployed + employed times 100

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2
Q

How Good of an Indicator?

A

good but not amazing
doesn’t count discouraged workers(workers who want/available for work gave up looking for a job)
doesn’t measure quality of jobs(how much people like their job)
underemployment rate- part time workers who want full time position, people who want work but can’t find any

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3
Q

Frictional Unemployment

A

short term unemployment caused by the difficulties of matching employees to employers
scarcity of information one cause- workers don’t know all of the jobs out there and employers don’t know all available candidates
large share of unemployment

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4
Q

Structural Unemployment

A
long term unemployment caused by long lasting shocks or permanent feature of an economy that makes it difficult to find jobs
typically more than 1 year
occurs because economy needs time to restructure
structural changes in businesses happen during recessions
two problems to the structural unemployed- skills decay and employers may see being unemployed as sign of laziness
labor regulations(benefits, minimum wage, unions, etc) can increase unemployment rate
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5
Q

Structural Unemployment and Unemployment Benefits

A

when price of unemployment is low, more unemployment exists

reduce incentive for workers to search for and take new jobs

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6
Q

Structural Unemployment and Minimum Wages/Unions

A

minimum wage raises price of labor from market wage, and as labor becomes more expensive they lay off workers
median wage- one half of all workers earn wages below and one half earn above
union- collection of workers that bargain together over wages, benefits, and working conditions
unions raise price of labor

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7
Q

Structural Unemployment and Employment Protection Laws

A

employment at will doctrine- employee may quite and an employer may fire an employee
severance packages- make labor market less flexible and dynamic
businesses don’t want to hire when costs are too great and require long term commitments

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8
Q

Labor Regulations Reducing Structural Unemployment

A

active labor market policies- work tests, job search assistance programs, early employment bonuses, and job retraining programs that focus on getting the unemployed employed

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9
Q

Cyclical Unemployment

A

unemployment that correlates with the business cycle

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10
Q

Labor Force Participation

A

percentage of adult, noninstitutionalized adults, civilian population
unemployed + employed/adult population times 100
2 factors- lifecycle effects and demographics and incentives

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11
Q

LFP Lifecycle Effects and Demographics

A

prime working years between 25 and 54, most retire at 65

falling labor force participation rate means fewer tax receipts

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12
Q

LFP and Incentives

A

work pays more than leisure
can’t encourage or discourage early or late retirement
women rule

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