The American Economy Midterm Flashcards
What is the largest driver of the economy?
Consumer Spending
What are measures of consumer demand?
Personal Income
Personal Expenditures
Savings
Subcategories of personal income
Wages and salaries (56%)
Proprietors income (8%) self employed
Rental Income (1%)
Transfer payments (13%)
Dividend Income (5%)
Interest income (9%)
Other income (pensions, health care, worker insurance (9%)
Categories of expenditures
Durable goods
Nondurable Goods
Services
Durable good
Products that last 3+ years
(appliances, furniture, cars,)
Expensive
Around 13% of all spending
Non Durable goods
Products that last under 3 years
Food, clothing, books.
30% of all spending.
Services
medical treatments, streaming services, legal services, wellness services,
60% of all spending
Decentralized mechanisms
Voluntary
>Non market examples: collective action which is engaging in common activity with others.
>Markets
Centralized mechanisms
Most clear example is the state
Median Voter theory is used to model these
Median voter theory
States that in the right circumstance (democratic, majority rules vote) that the median voter will elect the person or law.
Criteria for Decentralized Decision-Making in game theory…
All outcomes have to be self-enforcing.
Is the promise made a credible commitment?
Problems of multiple equilibria and suboptimal equilibria are likely
Collective bargaining
process by which a labor organization, designated or selected by a majority of an employer’s employees, negotiates on behalf of employees with the employer over wages and other terms and conditions of employmen
Public vs private sector unions
Private unions- negotiate and bargain with employers,
Public unions - spend their time bargaining with local and state legislators
Wagner act
it gave employees to formulate and join unions
Created a new agency called the N.L.R.B (national Labor Relations board which oversaw negotiations between labor unions and employers.
Taft Hartley
Taft hartley madę edits to the Wagner act and was seen by many as a step back for labor rights. it enacted right to work laws which took away union shops which in turn hurt union participation and collective bargaining possibility.s
Labor Force participation rate
Labor force: employed persons or those seeking employment
What are reasons that productivity will significantly increase?
> Technological changes
Capital Deepening over time: Capital cheaper relative to labor AND increase in use of capital per worker
Investment in human capital: Schooling and health
What are variables affecting Labor Force Participation Rate?
> Declining fertility rates
Decrease in child labor
Increased female participation
Immigration
Longevity (older population works less)
What is an agency shop?
a place of employment where full membership in a union is not required, but union acts an agent for the employees
What did the Wagner act of 1935 do?
> Created the NLRB (national labor relations board)
Created agency shops
Streamlined unionization process
Curtailed managements response to unionization efforts
Workers could not be fired
Replacements could be hired to keep business in operation
Lockouts were allowed for contract negation purposes but not to stop unionization.
What did Taft Hartley 1947 do?
Created Right to Work Laws
> States were given power to ban closed shops/ union shops
> No strikes allowed to put pressure on firms to allow unions
> Lowered penalties for interfering with unionization
What was the peak of US unionized labor?
1947- 35%
Rates of declining organized labor…
1947- 35%
1970’s 30%
Mid 1990’s 15%
what was the unionization % in 2016?
10.7% in the US overall
6.4 % in the private sector
34.4% in the public sector
