Chapter 9 Unemployment & the Labour Market Flashcards
Who is counted in the Labour force?
Unemployed + Employed
people who are not looking for work or are under 15 are not in the labour force. they are also called discouraged workers
Measuring Employment
Employed / working age population
someone who has been working for trade of profit in the past few weeks
Measuring Unemployment
Unemployed/ labour force
Someone who is looking for work
Labour force participation rate
Labour force / working-age population
When does the labour market reach Equilibrium?
When the quantity of labour supplied = the quantity of labour demanded
unemployment is common during a recession, but will never be zero because people are always looking for jobs.
there is always a supply in labour, a demand for labour and a price (wage)
Demand for labor comes from firms
- as the wages go down, the demand for labour goes up and supply goes down.
- as the wages go up, the demand for labor goes down and the supply goes up
4 kinds of unemployment
Frictional: when the workers switch jobs or locations
Structural: when the worker’s skillsets don’t match the market demand
real wage (classical) - when wages remain about the price level. when a price floor creates a surplus of labour
Cyclical: when the economy fluctuates in cycles (covid-19)
Why aren’t wages decreasing?
- Minimum wages
the lowest wages a firm is legally allowed to pay its workers - efficiency wages
when firms pay above the equilibrium wage to increase worker productivity, or to prevent them from getting a second job or from leaving.
firms pay more for quality - unions and bargaining
a disagreement between the workers and the firms about wages, working conditions or benefits, they threat to strike if conditions don’t improve
Employment Insurance
money that the government pays to unemployed people.
Discouraged workers
people who stop looking for work because of the condition of the labour market.
