Chapter 9 Flashcards
What are the 3 groups of Population (having to do with unemployment)
- employed
- unemployed
- not in the labour force
labour force
the total # of workers, including the employed and unemployed.
A person is considered ______ if he or she has spend most of the previous week working at a paid job.
employed
A person is _______ if he or she is on temporary layoff, is looking for a job, or is waiting for the start date of a new job.
unemployed
Not in the labour force includes?
everyone who isn’t employed or unemployed
What is the “u-rate” ?
unemployment rate: % of the labour force that is unemployed.
Define: the % of the adult population that is in the labour force?
labour force participation rate
Is unemployment changed? If so how?
Sue lost her job and begins looking for a new one.
Yes , unemployment rises
Is unemployment changed? If so how?
Jon, has been out of work since last year, and gives up looking for new work.
unemployment rate falls.. Jon is no longer counted as unemployed, and not in the labour force.
Is unemployment changed? If so how?
Sam,thesoleearnerinhisfamilyof5,justlosthis $80,000 job as a research scientist. Immediately, he takes a part-time job at McDonald’s until he can find
another job in his field.
wont affect unemployment rate. was rehired.
What does the Unemployment rate not account for?
- whether a person is unemployed or a person is not in the labour force
- People who have given up looking for work don’t show up on the U rate
- People claim unemployment assistance even when they aren’t working
Is there ALWAYS some unemployment?
yes
the rate of unemployment to which economy tends to return in the long run is…
natural rate of unemployment
Define: the deviation of unemployment from its natural rate?
Cyclical unemployment
What are the 2 types of unemployment ?
Frictional unemployment
Structural unemployment
Frictional unemployment
occurs when workers spend time searching for the jobs that best suit their skills and tastes (short-term)
Define: what occurs when there are fewer jobs than workers (longer-term)
Structural unemployment
Job search is..
the process of matching workers with appropriate jobs
changes in the composition of demand across industries or regions of the country
sectoral shifts
frictional unemployment is inevitable. T or F?
True
Define: these provide information about job vacancies to speed up the matching of workers and jobs
government employment agencies
Public training programs
aim to equip workers displaced from declining industries with the skills needed in growing industries.
Define: Employment Insurance (EI)
a govt program that partially protects workers’ incomes when they become unemployed.
T or F: Employment insurance (EI) increases frictional unemployment
True; people respond to incentives
The minimum wage may exceed the equilibrium wage for the least skilled or experienced workers, causing ______ _______.
Structural unemployment
When the wage is above the equilibrium level, the quantity of labour supplied _______ the quantity of labour demanded.
exceeds; workers are unemployed because they are waiting for jobs to open up. structural unemployment
Union
a worker association that bargains with employers over wages, benefits, and working conditions.
do union workers earn higher wages?
yes by 20%
collective bargaining
the process by which unions and firms agree on the terms of employment.
when the union organizes a withdrawal of labour from the firm, or union and firm can’t agree
a Strike
When unions raise the wage above equilibrium, quantity of labour demanded ____.
falls; unemployment results
Union “insiders”
workers who remain employed, they are better off
Union “outsiders”
workers who lose their jobs, they are worse off
Where do Union outsiders go?
non-unionized labour markets.
how do non-unionized labour markets compare to unions?
non-union: increases labour lsupply and reduces wages.
Efficiency Wages
firms voluntarily pay above-equilibrium wages to boost worker productivity
4 reasons of Efficiency wages:
Worker health
worker turnover
worker quality
worker effort
Define: Hiring & training new workers is costly. Paying high wages gives workers more incentive to stay.
Worker turnover; reduces turnover
Define: paying higher wages allows orkers to eat better, makes them healthier, and more productive.
worker health; in less developed poorly nourished countries
Worker Quality
offering higher wages attracts better job applicants, increases quality of the firm’s workforce
Workers can work hard or shirk. Shirkers are fired. workers have more incentive to work and not shirk if the wage is above equilibrium
Worker Effort
Which would reduce frictional unemployment?
A. The govt eliminates the minimum wage.
B. The govt increases Employment insurance
benefits.
C. A new law bans labour unions.
D. More workers post their resumes at Monster.ca, and more employers use Monster.ca to find suitable workers to hire.
E. Sectoral shifts become more frequent
D ; likely to speed up the process of matching workers and jobs.
Which would be most likely to increase frictional unemplyment?
A. The govt eliminates the minimum wage.
B. The govt increases Employment insurance
benefits.
C. A new law bans labour unions.
D. More workers post their resumes at Monster.ca, and more employers use Monster.ca to find suitable workers to hire.
E. Sectoral shifts become more frequent
B, E ;
Which would reduce structural unemployment?
A. The govt eliminates the minimum wage.
B. The govt increases Employment insurance
benefits.
C. A new law bans labour unions.
D. More workers post their resumes at Monster.ca, and more employers use Monster.ca to find suitable workers to hire.
E. Sectoral shifts become more frequent
A, C;
The natural rate of unemployment consists of what 2 things?
frictional unemployment
structural unemployment
______ and _____ ______ participation rates vary widely across demographic groups.
Unemployment, labour force
Natural rate of unemployment is the ____ rate of unemployment. The ____ rate fluctuates.
normal; actual
Cyclical unemployment is the deviation of unemployment from its ______ rate and is connected to ____ ____ economic fluctuations.
natural; short term
The natural rate includes _____ unemployment and _____ unemployment.
frictional and structural
________ unemployment occurs when workers take time to search for the right jobs.
frictional
________ unemployment occurs when above equilibrium wages result in a surplus of labour
structural
What are the 3 reasons for above-equilibrium wage (structural unemployment) include:
minimum wage laws
unions,
efficiency wages
