Exam 2

Question 1

What is the main source of information on unemployment in the U.S.?

Answer 1

Current Population Survey (CPS)

Conducted by the U.S. Census Bureau and Bureau of Labor Statistics (BLS)

Question 2

How many U.S. households does the CPS cover per month?

Answer 2

Approximately 60,000 households

Question 3

What does the CPS ask participants?

Answer 3

If they are working and how much they are earning, among other questions

Question 4

What is the working age population calculated by subtracting?

Answer 4

Young (less than 16 years old), Military, Institutionalized population

Question 5

Define ‘Labor force’.

Answer 5

Working-age people who are either employed or unemployed

Question 6

What are the criteria for being considered ‘employed’?

Answer 6

• Worked at least 1 hour as paid employee
• Worked 15 hours as unpaid employee in family business
• Temporarily absent due to various reasons

Question 7

What defines ‘unemployment’ according to the BLS?

Answer 7

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

Question 8

What does it mean to be ‘not in the labor force’?

Answer 8

Individuals who do not have jobs and are not actively looking for work

Question 9

Give examples of individuals counted as ‘not in the labor force’.

Answer 9

• Homemakers
• Full-time students
• Retirees
• Disabled individuals
• Those who choose not to work

Question 10

Calculate the labor force given 147.3 million employed and 13.5 million unemployed.

Answer 10

160.8 million

Question 11

What is the Labor-force participation rate (LFPR)?

Answer 11

Indicates what fraction of the population wants to be working, regardless of employment status

Question 12

What are marginally attached workers?

Answer 12

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

Question 13

Define discouraged workers.

Answer 13

Marginally attached workers who are not currently looking for a job due to belief that no jobs are available

Question 14

List the types of unemployment.

Answer 14

• Frictional unemployment
• Structural unemployment
• Real-wage or classical unemployment

Question 15

What causes frictional unemployment?

Answer 15

Workers changing location, job, or career

Question 16

What is structural unemployment?

Answer 16

Caused by a mismatch between the skills workers can offer and the skills in demand

Question 17

What contributes to structural unemployment?

Answer 17

• Technological change
• Change in tastes
• Reallocation of jobs

Question 18

What is the U.S. federal minimum wage?

Answer 18

$7.25 per hour

Question 19

What are the pros of minimum wage?

Answer 19

• Provides basic standards of living

Question 20

What are the cons of minimum wage?

Answer 20

• Can increase unemployment if binding
• May lead to illegal jobs

Question 21

What did the research by David Card and Alan Krueger (1992) find?

Answer 21

Minimum wage increase did not lead to job losses

Question 22

What was the outcome of the Schneider et al. (2024) study on California’s minimum wage?

Answer 22

18% rise in average hourly pay with no significant reduction in employment levels

Question 23

What are labor unions?

Answer 23

Groups of employees who bargain with employers over salaries and work conditions

Question 24

What was the percentage of unionized workers in the U.S. in 1950?

Answer 24

About 1/3 of workers

Question 25

What was the unionization rate in the U.S. as of now?

Answer 25

About 12% of workers

Question 26

What were the 2023 Hollywood Strikes about?

Answer 26

Groundbreaking agreements on AI protections, pay raises, and improved working conditions

Question 27

What is an efficiency wage?

Answer 27

Wages set above the market rate to increase productivity

Question 28

What is classical unemployment?

Answer 28

Results from wages being higher than the market-clearing level

Question 29

What causes cyclical unemployment?

Answer 29

Fluctuations from natural unemployment during economic downturns

Question 30

Why are wages considered sticky?

Answer 30

They are slow to respond to shifts in the economy

Question 31

What impact does unemployment insurance have?

Answer 31

* Can increase natural unemployment rate if generous * Allows people to find the right job instead of rushing

Question 32

What factors affect unemployment?

Answer 32

* Government policies * Minimum wage laws * Unemployment insurance * Taxes and worker rights * Professional training programs

Question 33

What is the role of public training programs?

Answer 33

They reduce structural unemployment

Question 34

What entity provides recommendations on the definition and measurement of unemployment?

Answer 34

International Labor Office (ILO)

Question 35

What makes it difficult for firms to fire workers during economic downturns in France?

Answer 35

Labor laws typically make it very difficult or even illegal to fire workers during economic downturns ## Footnote This reflects strong worker rights protections in France.

Question 36

What factors contribute to a decrease in frictional unemployment?

Answer 36

Public training programs, public unemployment agencies, technologies (like the internet) ## Footnote These factors help individuals find jobs more efficiently.

Question 37

Are the definitions of unemployment rate identical across developed countries?

Answer 37

No, they are not identical ## Footnote The International Labor Office (ILO) provides recommendations that many countries follow, but there are still differences.

Question 38

What age limits are considered in the definition of unemployment in different countries?

Answer 38

15 or 16 years old ## Footnote Age limits for counting individuals as unemployed can vary between countries.

Question 39

How do different countries treat armed forces in unemployment statistics?

Answer 39

Included or not included ## Footnote This can affect the overall unemployment figures reported.

Question 40

What is the treatment of unpaid family workers in unemployment definitions in different countries?

Answer 40

If work less than 15 hours, the US does not count them as employed; other countries may count them ## Footnote This leads to variations in unemployment statistics.

Question 41

What does 'active job search' mean and how does it differ across countries?

Answer 41

The meaning of 'active job search' varies across countries ## Footnote This affects who is counted as unemployed.

Question 42

How is waiting to start a new job counted in unemployment statistics?

Answer 42

Counted or not counted as unemployed ## Footnote This can vary between countries.

Question 43

What is the classification of layoffs in terms of employment status in different regions?

Answer 43

Employed or not in labor force in Europe; unemployed in the US and Canada ## Footnote This difference can impact unemployment rates.

Question 44

What current availability criteria differ between the US and Europe in unemployment definitions?

Answer 44

US – in the reference week; Europe – 2 weeks after interview ## Footnote This affects who is counted as unemployed.

Question 45

How are students counted in unemployment statistics if they are seeking jobs?

Answer 45

Counted or not as unemployed ## Footnote This varies by country.

Question 46

What are the four comparative programs that adjust national unemployment data?

Answer 46

Bureau of Labor Statistics (BLS), OECD, International Labor Office (ILO), Eurostat ## Footnote These organizations help standardize unemployment data for international comparison.

Question 47

What do standardized or harmonized unemployment rates provide?

Answer 47

A better basis for international comparison than national figures ## Footnote This helps in understanding global unemployment trends.

Question 48

What is a notable remaining difference in unemployment definitions across comparative programs?

Answer 48

The treatment of passive jobseekers ## Footnote This can lead to discrepancies in reported unemployment rates.

Question 49

How significant are the differences in unemployment rates caused by differences in definitions?

Answer 49

About 1% between US and Canada; less than 1% between US and Eurostat ## Footnote These differences can impact policy and economic analysis.