ECON 103 CHAPTER 7

If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately

s/(s+f)

Economists call the changes in the composition of demand among industries and regions

sectoral shifts

where there is structural unemployment, the real wage is

rigid at a level above the market-clearing level

which of the following characteristics made the 2008-2009 recession differ most sharply from previous recessions

a large spike in the duration of unemployment

unions contribute to structural unemployment when collective bargaining results in wages

above the equilibrium level

if the underground economy is larger in europe than in the united states, then the difference in the ___ number of hours worked between europe and the united states may be smaller than the difference in the ___ numbers of hours worked

actual; measured

entry into and exit from the labor force are important to the determination of the unemployment rate because

almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market

the earned income tax credit

does not raise labor costs

paying efficiency wages helps firms reduce the problem of moral hazard by

encouraging unsupervised workers to maintain a high level of productivity

economist robert barro attributes the increase in the duration of unemployment to ___ while economist paul krugman attributes the increase duration to ____

expanded unemployment-insurance coverage, insufficient consumer demand

as the relative demand for unskilled workers falls, wages for unskilled workers ___ and unemployment compensation becomes a ___ attractive option

fall; more

more frequent holidays for workers in europe than in the united states contribute to

fewer hours worked per year by the average employed person in europe than the average employed person un the united states

unemployment caused by the time it takes workers to search for a job is called ____ unemployment

frictional

short term unemployment us most likely to be ___ unemployment while long term unemployment is mostly likely to be ___ unemployment

frictional; structural

many economists attribute part of the recent increase in european unemployment to

generous benefits from unemployed workers

a spell of unemployment begins when a person leaves his or her job or

has been without a job for at least four weeks

The minimum wage:

has its greatest impact on teenage unemployment

in the case of unions the conflict of interest between different groups of workers results in insiders wanting ___ ,while outsiders want ___

high wages; more hirings

which of the following hypotheses is consistent with fewer hours worked per year in europe than in the united states

higher tax rates in europe than in the united states

which of the following statements correctly describes European labor markets

in recent years the average unemployment rate in Europe has been higher that the unemployment rate in the united states

if wage rigidity holds the real wage above the equilibrium level, and increase in the supply of labor will____ the number employed

increase

across countries of Europe, greater spending on unemployment insurance tends to ___ unemployment and more active labor market policies tend to ___ unemployment

increase; decrease

the unemployment insurance system may be desirable because unemployment insurance

induces workers to reject unattractive job offers

much of the difference in unemployment rates across Europe is attributable to differences in

long-term unemployment

results from the Euro-Barometer Survey series suggests that people ate happier when inflation is ___ and unemployment is

low;low

earlier retirement in europe than in the united states contributes to

lower employment to population ratios in europe than in the united states

Sectoral shifts:

make frictional employment inevitable

transitions into and out of the labor force

make unemployment statistics difficult to interpret

government policies directed at reducing frictional unemployment include:

making unemployment insurance 100 percent experience rated

all of the following statements about minimum wage workers in the United States are correct except

minimum wage workers are more likely to be male

In recent years, Europe has experienced ______ unemployment than the United States, and employed Europeans work ______ hours than employed Americans.

more;fewer

data on unemployment un the united states show that

most weeks of unemployment are attributable to the long-term unemployed

when outsiders have a greater role than do insiders in the wage-bargaining process, the negotiated wage is likely to be ____ the equilibrium wage

much closer to

when insiders have a much greater impact on the wage-bargaining process than do outsiders the negotiated wage is likely to be ___ the equilibrium wage

much greater than

most spells of unemployment are ___ term, and most weeks of unemployment are attributable to ___ term unemployment

short; long

unemployment insurance increases the amount of frictional unemployment by

softening the economic hardship of unemployment

the unemployment resulting from wage rigidity and job rationing is called

structural unemployment

the unemployment resulting when real wages are held above equilibrium is called ____ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ___ unemployment

structural; frictional

European unemployment rates are positively correlated with each of the following except:

the amount of coordination among employers in bargaining with unions

The natural rate of unemployment is

the average rate of unemployment around which the economy fluctuates

if the steady state rate of unemployment equals 0.125 and the fraction of employed workers lose their jobs each month (the rate of job separations) os 0.56, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.08

if the steady state rate of unemployment equals 0.10 and the fraction of employed workers lose their jobs each month (the rate of job separations) os 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:

0.18

economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about

1 to 3 percent

if the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 ( the rate of job findings) then the natural rate of unemployment is

10 percent

the percentage of workers who belong to unions in the united states is approximately

13 percent

in past nonrecessionary periods, a typical worker in the United States who is covered by unemployment insurance receives ____ percent of his or her former wages for ____weeks

50;26

suppose that over the course of a year 100 people are unemployed for 4 weeks each while 10 people are unemployed for 52 weeks each. Approximately what percentage of the total weeks of unemployment were attributable to the long-term unemployed

56.5 percent

The natural rate of unemployment in the United states since 1950 has averaged between ______ and _______ percent

5;6

Frictional unemployment is inevitable because

the demand for different goods always fluctuates

policies to substantially reduce the natural rate of unemployment should be targeted at

the long term unemployed

one efficiency- wage theory implies that firms pay high wages because

the more a firm pays its workers, the greater their incentive to stay with the firm

In a steady state

the number of people finding jobs equals the number of people losing jobs

the generosity of unemployment insurance benefits is measured by

the replacement rate and the duration of benefits

Frictional unemployment is unemployment caused by:

the time it takes workers to search for a job

which of the following is not a proposed explanation for the fact that Americans on averaged work 20 percent more hours than the typical resident of western Europe

the underground economy is larger in america than in europe

when the real wage is above the level that equilibrates supply and demand

thee quantity of labor supplied exceeds the quantity demanded

All of the following are reasons for frictional unemployment except

unemployed workers accept the first job offer that they receive

If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ____ percent

9 percent

suppose that over the course of a year 100 people are unemployed for 4 weeks each while 10 people are unemployed for 52 weeks each. Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed

9 percent

In the model of the steady state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ___ who find a job each month, while the rate of job separation equals the percentage of the ___ who lose their job each month

unemployed; employed

The macroeconomic problem that affects individuals most directly and severely is

unemployment

All of the following are causes of structural unemployment except

unemployment insurance

all of thee following policies were adopted by the government in an attempt to reduce the natural rate of unemployment except:

unemployment insurance

examples of active labor market policies include all of the following except

unemployment insurance

the recent reduced demand for unskilled workers relative to skilled workers has led to ___ for unskilled workers in Europe compared to ___ for unskilled workers in the United States

unemployment; lower wages

workers unemployed as a result of wage rigidity are

waiting for a job to become available

discouraged workers are individuals who

want a job but have given up looking for one

A policy that decreases the job separation rate _____ the natural rate of unemployment.

will decrease

A policy that increases the job-finding rate _____ the natural rate of unemployment.

will decrease

spells of unemployment end when the unemployed person finds a job or

withdraws from the labor force

according to studies of individual unemployed workers, these workers are most likely to find a job

within a few weeks of their unemployment insurance running out

which of the following is the best example of structural unemployment

Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of job available

in 2007 in the united states among labor force members ages 16 to 19, the highest unemployment rate was for

black males

which of the following statements most closely describes the variation in unemployment rates across countries in Europe

countries with higher rates of unionization tend to have higher unemployment rates, but this is partially mitigated if wage negotiations are coordinated among employers

which of the following is an example of frictional unemployment?

dave searches for a new job after voluntarily moving to San Diego

if wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ___ the number unemployed

decrease

when henry ford paid his workers $5 per day when the prevailing wage was between $2 and $3 a day

it raised the efficiency of his workers

one reason for unemployment is that

it takes time to match workers and jobs

which of the following rankings (from most severe to least severe) best captures the degree of hardship associated with various types of unemployment

job losers, job leavers, marginally attached

public policy to increase the job finding rate include ____ and public policy to decrease the separation rate include ____

job training programs; 100 % experience rated unemployment insurance

differences in unemployment rates across demographic groups are most closely correlated with differences in

job-separation rates

by paying efficiency wages, firms contribute to higher unemployment because they

keep the wage above equilibrium level

during the period from 1990 to 2006 in the united states most spells of unemployment lasted

less than one month, yet most of the weeks of unemployment occurred in spells lasting two or more months

compared with an employed white teenage male, and employed middle aged white male is ___ likely to become unemployed, and once unemployed is ___ likely to find a job

less; just as

The unemployment rate in the United States since 1952 has

never been close to 0

Firms currently have incentives to temporarily lay off workers because firms typically are charged for ___ of workers unemployment benefits

only a part

discouraged workers are counted as

out of the labor force

centralized union wage bargaining with government intervention in Sweden gives relatively more influence to ___ while firm-level union wage bargaining in the United states gives relatively more influence to ___

outsiders; insiders

most current unemployment insurance programs are

partially experience rated

wage rigidity

prevents labor demand and labor supply from reaching the equilibrium level

according to efficiency-wage theories, firms benefit by paying higher than equilibrium wage because worker____ increases

productivity

paying efficiency wages help firms reduce the problem of adverse selection by

providing an incentive for the best qualified workers to reaming with the firm

Permitting a lower minimum wage for teenagers would likely

raise unemployment among unskilled adults

efficiency-wage theories suggest that a firm may pay workers more that the market clearing wage for all of the following reasons except to

reduce the firm's wage bill

Any policy aimed at lowering the natural rate of unemployment must either ____ the rate of job separation of ____ the rate of job finding

reduce; increase