Chapter 8 Flashcards
“The number of people working” would be put into what category?
Employed
“The number of people out of work and currently looking for a job” would be put into what category?
Unemployed
How can we calculate unemployment?
labour force x unemployment rate/100
“The number of people employed and unemployed” would be put into what category?
Labour Force
What are people over the age of 15 known as?
Adult Population
“The number of people employed and apart of the adult population” would be put into what category?
The Employment Rate
The Unemployment Rate is the
The percent of adults who are in the labour force but don’t have jobs
(Unemployed ÷ Labour ForceX100)
The Labour Force Participation Rule is
the percentage of adults in the economy who are either employed or unemployed
how can we calculate the labour force participation rate?
Total labour force÷Total adult population X100
Unemployment Rate can be affected by…
Gender, Race and Age
One should be cautious when comparing national unemployment due to..
Different Definitions of Unemployment, Different Survey tools for measuring, Poorer countries lacking resources and technical Capabilities and Different Labour Markets
Patterns in Unemployment include
the unemployment rate moves up and down as an economy moves in and out(fluctuates), never falls to 0, almost never seems to drop below 3%, stays low for short periods, unemployment rate always returns to a range between 6-8%
what causes short-run changes in employment ?
the Standard Economic Model, the Competitive Model, the Business Cycle, and the Sticky Wage theory
Cyclical Unemployment
Is the thing in unemployment that the economy causes due to moving from expansion to recession or recession to expansion
, is the Short term unemployment
What is known as the booms and recessions that shift the demand for the labour curve creating short term unemployment?
The Business Cycle
Wages might be sticky downwards due to..
implicit contract, efficient wage theory, adverse selection, insider-outsider model, and the relative wage coordination
The Sticky Wage theory tries to?
reconcile the supply and demand model with the reality of unemployment
Hidden Employment workers are those who work….
part time/ temporarily and are looking for a full-time job
The Underemployed are those who are…
Employed in a job that is below their skills
Discouraged workers are those who….
Stop looking for employment due to lack of suitable positions available
The sticky wage theory states that …
wages are slow to adjust downwards when the economy is in poor condition
In a supply and demand model of the labour market, the labour market should move toward an?
Equilibrium(equal) wage(We) and quantity(Qe) where the labour supplied by workers is equal to quantity of labour demanded by employers
An Implicit Contract is
when the employer tries to keep wages from falling when the economy is weak or the business is in trouble
The Efficiency Wage Theory is
the idea that the productivity of workers will increase if the employer pays them more then the wage/equilibrium
Adverse Selection
the idea that if employers reduce wages for all workers the best will leave. to prevent this firms decide which workers should leave through firings/layoffs rather then by reducing wages
The Insider-Outsider Model is
the idea that “insiders” are those who are already working for and are familiar with the firm and the “outsiders” are the recent hires, cutting wages may affect the insiders and damage the firms productivity
The Relative Wage Coordination is
the idea that wage cuts are hard for the economy to implement because workers fight against them
What causes changes in unemployment in the long run?
Natural Rate of Unemployment and Full Employment
What is the Natural Rate of Unemployment
the unemployment rate that always exists even in a growing well functioning economy
What is the type of natural rate of unemployment that occurs when workers move between jobs?
Frictional Unemployment
What is the type of natural rate of unemployment that occurs because individuals lack the skills that an employer is looking for?
Structural Unemployment
Full Employment is
when the unemployment rate=the natural rate
Supply-side policies
are policies that assist the unemployed (ex. assistance for job searching, retraining, insurance, benefits, food stamps, medical benefits,etc.)
Demand-side policies
policies that can affect the willingness of firms to hire (ex. government imposing strict regulations towards businesses,etc)
the most significant cost of high unemployment is
the potential goods and services that might have been produced but weren’t due to lack of workers
if everyone who looked for a job gave up, the unemployment rate would..
decrease
Reasons for downward tendency of natural rate of unemployment?
the internet which makes jobs searching easier, growth of the temporary worker (agencies that provide jobs for workers while they are searching for permanent jobs), aging of the baby boon generation”(leaves less young people competing for jobs)
The Natural rate of unemployment is related to…
full employment and potential real GDP
what can have a powerful affect on the natural rate of unemployment?
shifts in productivity
