chapter 4 from book: overview of the labor market Flashcards
the labor market
market that allocates workers to jobs and coordinates employment decisions
national labor market
buyers of labor and sellers of labor are searching throughout the entire nation for each other
local labor market
buyers of labor and sellers of labor are searching tlocally for each other
when is an internal labor market said to exist?
When a formal set of rules and procedures guides and constrains the employment relationship within a firm
the labor force
all those over 16 years of age who are employed
all those over 16 years of age actively seeking work,
all those over 16 years of age expecting recall from a layoff
Those in the labor force who are not employed for pay
the unemployed
are people who are not employed and are neither looking for work nor waiting to be recalled from layoff by their employers counted as part of the labor force?
nah boy
the total labor force
the employed and the unemployed
what are the 4 major flows of the labor market?
- Employed workers become unemployed by quitting voluntarily or being laid off (being involuntarily separated from the firm, either temporarily or permanently).
- Unemployed workers obtain employment by being newly hired or being recalled to a job from which they were temporarily laid off.
- Those in the labor force, whether employed or unemployed, can leave the labor force by retiring or otherwise deciding against taking or seeking work for pay (dropping out).
- Those who have never worked or looked for a job expand the labor force by entering it, while those who have dropped out do so by reentering the labor force.
labor force participation rate
labor force divided by population
unemployment rate
The ratio of those unemployed to those in the labor force
when is the labor market considered tight?
When the unemployment rate is around 5 percent
when jobs in general are plentiful and hard for employers to fill
most of those who are unemployed will find other work quickly
when is the labor market considered loose?
When the unemployment rate is 5 percent or higher
workers are abundant and jobs are relatively easy for employers to fill
which industries have experience a drop in labor?
goods-producing industries (largely manufacturing)
which industries have experience a boom in labor?
private-sector services
The wage rate
the price of labor per working hour
The nominal wage
what workers get paid per hour in current dollars
what do you want to compare with nominal wages?
the pay of various workers at a given time
Real wages
suggest how much can be purchased with workers’ nominal wages
nominal wages divided by some measure of prices
when are real wages useful
useful in comparing the purchasing power of workers’ earnings over a period of time when both nominal wages and product prices are changing
The most widely used measure for comparing the prices consumers face over several years
the Consumer Price Index (CPI)
why are the bundles used for pricing purposes in the CPI updated periodically?
because consumers change what they buy over the years
the payment for a unit of time
wages
wages multiplied by the number of time units (typically hours) worked
earnings
depend on both wages and the length of time the employee works
total compensation
earnings plus employee benefits
employee benefits
either payments in kind or deferred
what type of benefits are the following
employer-provided health care and health insurance
Paid vacation time
payments in kind