Chapter 4: Labour Market Flashcards
Main tools for macroeconomic analysis
- GDP
- Unemployment
- Inflation
- Government deficits
Labour force concepts
- Working-age population
- Unemployment
Working-age population
People 16 years and over whi are not in jail, hospital or institutional care
Unemployment
People who, despite making specific efforts to find a job in the last 4 weeks, still don’t have one.
Labour market indicators
- Unemployment rate
- Employment-to-population ratio
- Labour force participation rate
Other types of labour force
- Marginally attached workers
- Discouraged worker
- Economic part-time worker
Marginally attached workers
People who are available and willing to work but don’t have a job nor are looking for one.
Discouraged workers
Marginally attached workers who have stopped looking for a job after repeated failures to find one
Economic part-time workers
People who work part-time but would like to find a full time job
Types of unemployment
- Frictional unemployment
- Structural unemployment
- Cyclical unemployment
- Natural unemployment
Frictional unemployment
Unemployment that arises from labour turnover
When does frictional unemployment increase??
- When more people enter the labour
- Unemployment compensation payments increase
Structural unemployment
Arises when changes in technology or international comeptition increase skill celing
Other causes of structural unemployment
- Minimum wages
- Efficiency wages
Cyclical unemployment
Fluctuating unemployment over the business cycle.
It increases during a recession
Natural unemployment
Arises from frictions and structural change when there’s no cyclical unemployment.
All unemployment that’s frictional or structural
Ways of government intervention in markets
- Price controls
- Taxes
- Production quotas
Deadweight loss
A loss of economic efficiency caused by desequilibrium for goods and services
Price floor
A price that a seller is not allowed to sell below.
Type of minimum wage in a labour market
Effects of minimum wage increase
- Risingit could cause less employment
- Rising it could also reduce costs as less people would quit. Less recruitment and training costs
