W4P1 - Notebook LM Flashcards
What is the relationship between the IS-LM model and the labour market?
The IS-LM model focuses on the demand side of the economy (consumption, investment, government spending), while the labour market determines how much labour is supplied. This is important for the AS-AD model, which introduces the supply side of the economy.
What is the “productivity puzzle” discussed in the lecture?
It refers to the significant slowdown in UK labour productivity growth, particularly after the 2008 financial crisis. The UK has been more affected than other developed economies, possibly due to the large financial services sector.
What are the three categories that people are divided into when looking at the labour market?
Employed, unemployed (actively seeking work), and non-participants (not working or seeking work).
How is the labour supply defined, and how is the unemployment rate calculated?
Labour supply is the sum of the employed and unemployed. The unemployment rate is the number of unemployed people divided by the total labour supply.
What was a key difference in how the US, UK, and Germany handled unemployment during the COVID-19 pandemic?
The US saw a large increase in unemployment due to layoffs, while the UK and Germany used government subsidies to help companies keep employees.
How can labour market reforms affect unemployment, using Germany as an example?
Germany implemented aggressive labour market reforms starting around 2005 which led to a significant decline in their unemployment rate.
How does age affect unemployment patterns?
Older workers tend to move into non-participation (retirement) rather than unemployment when they lose their jobs. Younger workers (18-24) were more affected by unemployment during the COVID-19 pandemic.
How do unemployment rates vary across different sectors?
Sectors like management are less affected by business cycles, while construction sees seasonal fluctuations. Service and sales sectors were heavily impacted by COVID-19 related closures.
Why is it important to analyse macroeconomic data over several years?
Macroeconomic trends and patterns often require several years of data to become clear. For example, the effects of COVID-19 on the labour market have become more evident over time.
