ch.29 Flashcards
(23 cards)
How is unemployment measured?
Through the unemployment rate (u-rate) and labor-force participation rate
What is the natural rate of unemployment?
The normal rate of unemployment around which the actual unemployment rate fluctuates
Why are there always some people unemployed?
Due to frictional and structural unemployment
How is the labor force defined?
Total number of workers, including the employed and unemployed
What is the formula for calculating the unemployment rate?
U-rate = (Number of unemployed / Labor force) x 100
What are the main categories of the labor force?
- Employed
- Unemployed
- Not in the labor force
What is the labor force participation rate?
Percentage of the adult population that is in the labor force
What does frictional unemployment refer to?
Unemployment that occurs when workers are searching for jobs that match their skills
What is structural unemployment?
Occurs when there are fewer jobs than workers, usually longer-term
What are sectoral shifts?
Changes in the composition of demand across industries or regions
What is unemployment insurance?
A government program that partially protects workers’ incomes when they become unemployed
How do minimum wage laws affect unemployment?
They may lead to structural unemployment by keeping wages above equilibrium level
What is collective bargaining?
The process by which unions and firms agree on the terms of employment
What are the four reasons firms might pay efficiency wages?
- Worker health
- Worker turnover
- Worker quality
- Worker effort
True or False: The unemployment rate includes discouraged workers.
False
What is the relationship between unions and unemployment?
Unions may raise wages above equilibrium, leading to a decrease in labor demand and increased unemployment
What is the primary purpose of government employment agencies?
To provide information about job vacancies and speed up the matching of workers with jobs
Fill in the blank: The unemployment rate is the percentage of those who would like to work but _______.
do not have jobs
What effect does unemployment insurance have on job search behavior?
Increases frictional unemployment as workers have less incentive to search or take jobs
What is the significance of long-term unemployment?
Most observed unemployment is long-term, despite most spells of unemployment being short
What is the difference between insiders and outsiders in the context of unions?
- Insiders: Workers who remain employed and are better off
- Outsiders: Workers who lose their jobs and are worse off
What are the criticisms of unions?
- They are seen as cartels
- They raise wages above equilibrium, causing unemployment
- They depress wages in non-union labor markets
What are some public policies aimed at reducing unemployment?
- Government employment agencies
- Public training programs
