Exam 2 Flashcards
What is the main source of information on unemployment in the U.S.?
Current Population Survey (CPS)
Conducted by the U.S. Census Bureau and Bureau of Labor Statistics (BLS)
How many U.S. households does the CPS cover per month?
Approximately 60,000 households
What does the CPS ask participants?
If they are working and how much they are earning, among other questions
What is the working age population calculated by subtracting?
Young (less than 16 years old), Military, Institutionalized population
Define ‘Labor force’.
Working-age people who are either employed or unemployed
What are the criteria for being considered ‘employed’?
- Worked at least 1 hour as paid employee
- Worked 15 hours as unpaid employee in family business
- Temporarily absent due to various reasons
What defines ‘unemployment’ according to the BLS?
Persons aged 16 years and older who had no employment during the reference week, were available for work, and made specific efforts to find employment
What does it mean to be ‘not in the labor force’?
Individuals who do not have jobs and are not actively looking for work
Give examples of individuals counted as ‘not in the labor force’.
- Homemakers
- Full-time students
- Retirees
- Disabled individuals
- Those who choose not to work
Calculate the labor force given 147.3 million employed and 13.5 million unemployed.
160.8 million
What is the Labor-force participation rate (LFPR)?
Indicates what fraction of the population wants to be working, regardless of employment status
What are marginally attached workers?
Persons not in the labor force who want and are available for a job and have looked for a job in the prior 12 months but not in the last 4 weeks
Define discouraged workers.
Marginally attached workers who are not currently looking for a job due to belief that no jobs are available
List the types of unemployment.
- Frictional unemployment
- Structural unemployment
- Real-wage or classical unemployment
What causes frictional unemployment?
Workers changing location, job, or career
What is structural unemployment?
Caused by a mismatch between the skills workers can offer and the skills in demand
What contributes to structural unemployment?
- Technological change
- Change in tastes
- Reallocation of jobs
What is the U.S. federal minimum wage?
$7.25 per hour
What are the pros of minimum wage?
- Provides basic standards of living
What are the cons of minimum wage?
- Can increase unemployment if binding
- May lead to illegal jobs
What did the research by David Card and Alan Krueger (1992) find?
Minimum wage increase did not lead to job losses
What was the outcome of the Schneider et al. (2024) study on California’s minimum wage?
18% rise in average hourly pay with no significant reduction in employment levels
What are labor unions?
Groups of employees who bargain with employers over salaries and work conditions
What was the percentage of unionized workers in the U.S. in 1950?
About 1/3 of workers
What was the unionization rate in the U.S. as of now?
About 12% of workers
What were the 2023 Hollywood Strikes about?
Groundbreaking agreements on AI protections, pay raises, and improved working conditions
What is an efficiency wage?
Wages set above the market rate to increase productivity
What is classical unemployment?
Results from wages being higher than the market-clearing level
What causes cyclical unemployment?
Fluctuations from natural unemployment during economic downturns
Why are wages considered sticky?
They are slow to respond to shifts in the economy
What impact does unemployment insurance have?
- Can increase natural unemployment rate if generous
- Allows people to find the right job instead of rushing
What factors affect unemployment?
- Government policies
- Minimum wage laws
- Unemployment insurance
- Taxes and worker rights
- Professional training programs
What is the role of public training programs?
They reduce structural unemployment
What entity provides recommendations on the definition and measurement of unemployment?
International Labor Office (ILO)
What makes it difficult for firms to fire workers during economic downturns in France?
Labor laws typically make it very difficult or even illegal to fire workers during economic downturns
This reflects strong worker rights protections in France.
What factors contribute to a decrease in frictional unemployment?
Public training programs, public unemployment agencies, technologies (like the internet)
These factors help individuals find jobs more efficiently.
Are the definitions of unemployment rate identical across developed countries?
No, they are not identical
The International Labor Office (ILO) provides recommendations that many countries follow, but there are still differences.
What age limits are considered in the definition of unemployment in different countries?
15 or 16 years old
Age limits for counting individuals as unemployed can vary between countries.
How do different countries treat armed forces in unemployment statistics?
Included or not included
This can affect the overall unemployment figures reported.
What is the treatment of unpaid family workers in unemployment definitions in different countries?
If work less than 15 hours, the US does not count them as employed; other countries may count them
This leads to variations in unemployment statistics.
What does ‘active job search’ mean and how does it differ across countries?
The meaning of ‘active job search’ varies across countries
This affects who is counted as unemployed.
How is waiting to start a new job counted in unemployment statistics?
Counted or not counted as unemployed
This can vary between countries.
What is the classification of layoffs in terms of employment status in different regions?
Employed or not in labor force in Europe; unemployed in the US and Canada
This difference can impact unemployment rates.
What current availability criteria differ between the US and Europe in unemployment definitions?
US – in the reference week; Europe – 2 weeks after interview
This affects who is counted as unemployed.
How are students counted in unemployment statistics if they are seeking jobs?
Counted or not as unemployed
This varies by country.
What are the four comparative programs that adjust national unemployment data?
Bureau of Labor Statistics (BLS), OECD, International Labor Office (ILO), Eurostat
These organizations help standardize unemployment data for international comparison.
What do standardized or harmonized unemployment rates provide?
A better basis for international comparison than national figures
This helps in understanding global unemployment trends.
What is a notable remaining difference in unemployment definitions across comparative programs?
The treatment of passive jobseekers
This can lead to discrepancies in reported unemployment rates.
How significant are the differences in unemployment rates caused by differences in definitions?
About 1% between US and Canada; less than 1% between US and Eurostat
These differences can impact policy and economic analysis.
