Chapt 7 Test 2

Unemployment insurance

Unemployed workers can collect a fraction of their wages for a certain period after losing their job

Structural unemployment

Unemployment resulting from wage rigidity and job rationing is sometimes called...The qty of labor supplied exceeds the qty labor demanded. Many workers are waiting for jobs to open up

Sectoral shift

A change in the composition of demand among industries or regions.

Efficiency wage

A third cause of wage rigidity in addition to minimum wage laws and unionization. High wages make workers more productive.The influence of wages on worker efficiency may explain the failure of firms to cut wages despite and excess supply of labor

Discouraged Workers

Counted as being out of the labor force and do not show up in unemployment stats

Wage rigidity

Reason for unemployment. The failure of wages to adjust to a level at which labor supply equals labor demand. Wages are not always flexible, so sometimes the wage is stuck above the market=clearing level. Wage rigidity is caused by minimum wage laws, prevents wages from falling to equilibrium levels

Natural rate of unemployment

The average rate of unemployment around which the economy flucuates

Outsiders

The unemployed bear part of the cost of higher wages because at a lower wage they might be hired

Frictional unemployment

The unemployment caused by the time it takes workers to search for a job. Because sectoral shifts are always occurring and because it takes time for workers to change sectors there is always frictional unemployment

Insiders and outsiders

The unemployment caused by unions and by the threat of unionization is an instance of conflict between different groups of workers. These two groups have conflicting interests

Insiders

Workers already employed by a firm. Typically try to keep wages high