Econ 222 Test 3 Part 1/3

Labor Force

Total Number of Workers Employed and Unemployed

Cyclical Unemployment

Unemployment fluctuates with the productivity and growth of the market. A good market with high output has low unemployment while a bad market with low output has high unemployment.

People who are unemployed because of job search are best classified as

frictionally unemployed

Minimum Wage Laws

Laws that force the minimum wage to be a certain number causing unemployment.

Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized asfollows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million peoplewho are either students, homemakers, retirees, or other people not seeking employment. What is the unemployment rate?

10.7%

In 2009, based on concepts similar to those used to estimate U.S. employment figures, the Japanese adult non- institutionalized population was 110.272 million, the labor force was 65.362 million, and the number of people employed was 62.242 million. According to these numbers, the Japanese labor-force participation rate and unemployment rate were about

59.3% and 4.8%

suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. What is the labor-force participation rate?

93.3%

Efficiency Wages

Above equilibrium wages paid by firms to increase productivity. Higher wages increase worker pool and job security.

Discouraged Workers

Individuals who would like to work but have given up on finding a job.

Labor Force Participation Rate Formula

Labor Force / Adult Population x 100

Exempt from Labor Force

Not employed and not unemployed, full-time students, homemakers, retirees.

Unemployment Rate Formula

Number of Employed / Labor Force x 100

Structural Unemployment

Number of jobs available in some markets are insufficient to provide a job for everyone who wants one. Results when wages are set above equilibrium.

Employed

People paid by companies, people that run their own business, unpaid workers in a family business, part time works, and temporary absent workers.

Unemployed

People who are not working, but tried looking for a job in the previous 4 weeks. People waiting to be recalled to previous job, people that have been fired.

Labor Force Participation Rate

Percentage of total adult population that is in the labor force

Unemployment Rate

Percentage of workers that are unemployed

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work duringthe last two months. Who does the Bureau of Labor Statistics count as "unemployed"?

Tatiana but not Ivan

Unions

Worker association that bargains with the employer over wages, benefits, and working conditions. Lower employment.

Frictional Unemployment

Workers take time to search for jobs that best suit their tastes and skills. Explains short spells of unemployment.

Sirius has just finished high school and started looking for his first job, but has not yet found one. Other things the same,the unemployment rate

and the labor-force participation rate both increase

Suppose that some people are counted as unemployed when, to maintain unemployment compensation, they search for work only at places where they are unlikely to be hired. If these individuals were counted as out of the labor forceinstead of as unemployed, then

both the unemployment rate and labor-force participation rate would be lower

If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is

cyclical unemployment amounting to 0.5 percent of the labor force

Efficiency wages, what do they do?

increase productivity but increase unemployment

Minimum wages create unemployment in markets where they create a _ of labor. This type of unemployment is called _.

surplus; structural