Chapter 8: The Labor Market: Workers, Wages, and Unemployment
If the Luddites had succeeded in ______ the introduction of labor-saving machinery, economic growth in Great Britain may have been ______.
blocking; slower
An individual is willing to supply labor whenever their real wage is _____ than their reservation price.
greater
International trade will lead to _____ in exporting industries.
higher wages and higher employment
The demand for labor will increase if worker productivity _____.
increases
Frictional unemployment may be desirable because:
job search may lead to better matches between workers and jobs, leading to higher output
International trade will lead to _____ in importing industries.
lower wages and lower employment
Sluggish productivity growth since the 1970s combined with rapid increases in the supply of labor help explain the:
slowdown in real wage growth since the 1970s despite rapid employment growth
The best explanation for the slowdown in real wage growth starting in the early 1970s despite rapid employment growth is _____ productivity growth combined with _____ in the supply of labor.
slower; an increase
Cyclical unemployment occurs because
the economy is experiencing a period of unusually low production.
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $70?
1
How many workers will Joe hire if he must pay each one $45 a day?
1
Slower real wage growth in the U.S. since the 1970s accompanied by rapid job growth, can be explained by
a productivity slowdown accompanied by an increase in the labor supply.
Which of the following factors lead to a decrease in the demand for labor?
-An decrease in the relative price of the product. -A decrease in the price of workers' output
Which of the following factors are likely to lead to an increase in the supply of labor?
-An increase in the population -An increase in the fraction of women who want to work -An increase in immigration
Which of the following factors lead to an increase in the demand for labor?
-An increase in the relative price of the product. -An increase in worker productivity
Select the five recent trends of the labor market.
-Increased U.S. wage inequality -Western Europe has experienced higher unemployment than the U.S. -The rate of job growth has slowed. -The real wage growth rate has slowed -Substantial growth in the real wages in industrialized countries
Which of the following are accurate statements about international trade?
-It increases efficiency. -It hurts workers who produce goods and services that are imported from abroad.
Which of the following does international trade lead to for those workers in industries that face competition from imports?
-Lower employment -Lower wages
Which of the following factors account for the increase real wages in industrialized countries over the last 100 years?
-Technological progress -Large increases in capital
Which of the following is/are true?
-Until the economic downturn that began in 2008, total employment in the United States had been increasing substantially for several decades. -In recent decades, there has been a pronounced increase in wage inequality in the United States.
Skill-biased technological change will:
-create incentives for workers to acquire education and skills -Increase wage inequality
Since WWII, the change in real wage rates
-has been positive, but has slowed down. -has been consistently positive.
For workers who produce goods and services that are exported abroad, international trade leads to which of the following:
-higher wages -higher employment
Over the last several decades, the labor supply has increased because of ______________.
-immigration -baby boomers entering the workforce -increases in women's labor force participation rates
Suppose that with one worker, you produce 100 bagels per day. With two workers, you produces 210 bagels per day. And with three workers, you produce 300 bagels per day. The addition of the third worker
-suggests diminishing marginal product of labor. -adds a positive amount to total product.
Quiz
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How many workers will XYZ-TV Company hire if the going wage for TV production workers is $60,000?
0
Based on the figure, if a union contract requires that the wage workers are paid be decreased from $30 to $20 per hour, the number of unemployed workers will fall by ______ workers.
17
In the United States, the average annual rate of growth of real wages was fastest in the period
1960-1973.
Consider the table below, if apple pies sell for $8, and the real wage is $35, then how many workers will this firm hire? (enter a number only).
2
How many workers will XYZ-TV Company hire if the going wage for TV production workers is $32,000?
2
Based on the accompanying labor-market diagram, if the minimum wage is set at $10 per hour, there will be ______ unemployed workers.
22
Consider the table below, if apple pies sell for $5, and the real wage is $16, then how many workers will this firm hire? (enter a number only).
3
Consider the table below, the marginal product of the 4th worker is _____
3
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $175?
3
Consider the table below, the marginal product of the 3rd worker is _____ (enter a number only).
4
For simplicity, assume that labor is the only input. How many workers will be hired if the hourly wage for workers is $30?
4
Consider the table below, if apple pies sell for $10, then the value of marginal product of the 3rd worker is dollars _____ (enter a number only).
40
Consider the table below, the marginal product of the 2nd worker is ____ (enter a number only).
5
Consider the table below, if apple pies sell for $10, then the value of the marginal product of the 2nd worker is _____ dollars (enter a number only).
50
Consider the table below, if apple pies sell for $12, then the value of the marginal product of the 2nd worker is ______ dollars (enter a number only).
60
Which of the following is an example of frictional unemployment?
A worker who is unemployed while searching for a job that is a good match for her skill set.
Which of the accompanying is an example of structural unemployment?
Dora lost her job when the textile factory closed. She does not have skills to work in another industry and has been unemployed for over a year.
True or false: The best way for governments to deal with the problems in the domestic labor market created by international trade is to try to limit international trade.
False
Why might workers leave importing industries and seek skills/jobs in exporting industries?
International trade lowers the wages of workers in importing industries and increases the wages of workers in exporting industries.
_____ will reverse some of the inequality caused by international trade.
Worker mobility between industries
The U.S. has experienced __________ in wage inequality in recent decades.
a substantial increase
The value of marginal product of labor is the _____ generated by hiring an additional worker.
additional revenue
As an economy moves out of a recession you would expect _____ to fall.
cyclical
Periods of unusually low production in an economy result in ______ unemployment.
cyclical
The increase in unemployment in the United States that accompanied the recession that started in December 2007 is an example of _____ unemployment.
cyclical
As firms hire more workers, diminishing returns to labor implies that the marginal product of each additional worker a firm hires will _____ when capital and other inputs are held constant.
decrease
An increase in unemployment insurance benefits will
decrease job search efforts of unemployed workers.
Worker mobility between industries will _____ the wage inequality caused by international trade.
decrease some of
Government regulations that increase the cost to the employer of hiring workers will
decrease the demand for labor.
As a result of a war in the country of Omega, refugees flee to the country of Alpha to seek employment. Holding other factors constant, the influx of refugees will ______ the real wage in Alpha and ______ employment in Alpha.
decrease; increase
The demand for labor will decrease if the real price of workers' output _____.
decreases
International trade increases wage inequality by _____ the wages of workers who produce products that are imported and _____ the wages of workers who produce products that are exported.
decreasing; increasing
In the labor market, firms ______ labor.
demand
Skill-biased technological change increases wage inequality by altering the ______ high-skilled workers relative to low-skilled workers.
demand for
If the price of tables sold by All-Oak Table Co. increases from $400 to $500, then the
demand for labor by All-Oak Table Co. increases.
If the price of radios produced by XYZ-Radio Company falls from $70 to $50 per radio set, then the
demand for labor by the XYZ-TV Company decreases.
International trade increases wage inequality by increasing the wages of workers in _____ industries and decreasing the wages of workers in _____ industries.
exporting; importing
If a worker is unemployed because he has just quit his job in order to find another job that pays better, then this is a type of _____ unemployment.
frictional
One benefit of ______ unemployment is that job search may lead to better matches between workers and jobs, leading to higher output.
frictional
The type of unemployment that is associated with the process of matching workers to jobs is called
frictional unemployment.
The type of unemployment that is associated with the process of matching workers to jobs is called _____ unemployment, while the unemployment that consists of workers who lack marketable skills is called _____ unemployment, and the type of unemployment that is caused by a decline in total spending is called _____ unemployment.
frictional; structural; cyclical
Two explanations for increasing wage inequality are ______ and ________.
globalization; skill-biased technological change
All of the accompanying describe trends in U.S. labor markets except
growing wage inequality in the United States in recent decades.
Governments can best deal with the problems in the domestic labor market created by international trade by _____.
helping workers in negatively affected industries find new jobs
If the introduction of computers increases the marginal product of higher-skilled workers relative to that of lower-skilled workers, then the demand for _____ workers will increase relative to the demand for _____ workers.
higher-skilled; lower-skilled
Skilled-biased technological change increases wage inequality by increasing the wages of _____ workers relative to the wages of _____ workers.
higher-skilled; lower-skilled
Generally, if the value of the marginal product of labor is greater than the wage rate, the firm should _____.
hire additional workers
Even though international trade increases economic efficiency, it will tend to hurt workers who produce goods and services that are _____.
imported from abroad
International trade will decrease the demand for labor in _____ industries and increase the demand for labor in _____ industries
importing; exporting
According to economic theory, an increase in the minimum wage will lead unemployment to _____.
increase
By reducing workers' incentives to look for jobs, unemployment insurance is typically thought to _____ the duration of unemployment spells.
increase
Minimum wage laws are generally thought to _____ unemployment.
increase
Over the last 100 years, technological progress and large increases in the capital stock have led real wages to _____.
increase
Skill-biased technological change will _____ workers' incentives to acquire education and training, provided they are at the early stages of career development.
increase
When labor unions successfully negotiate higher wages for their members, this is generally thought to _____ unemployment.
increase
An increase in demand in the market for the product that labor produces will
increase the demand for labor.
Assume the minimum wage exceeds the market-clearing wage. If there is an increase in the supply of labor then the number of workers who are unemployed will ______, and the number of workers who are employed will _______.
increase, not change
International trade will ____ the demand for labor in exporting industries and _____ the demand for labor in importing industries.
increase; decrease
In 2009, the U.S. government extended the number of weeks that unemployed workers could receive unemployment benefits from 26 weeks to 99 weeks. This policy change is likely to have _____ the duration of unemployment spells.
increased
Over the last several decades, the rise in women's labor force participation rates, the entry of baby boomers into the workforce and the increase in immigration have _____ labor supply.
increased
Skilled-biased technological change _____ the demand for higher-skilled workers relative to the demand for lower-skilled workers.
increases
As the real wage decreases, the quantity of labor demanded ______ and the quantity of labor supplied _______.
increases; decreases
Holding other factors constant, an increase in the capital stock ______ the real wage and ______ employment.
increases; increases
Skilled-biased technological change increases wage inequality by ______ the wages of higher-skilled workers relative to the wages of lower-skilled workers.
increasing
Labor unions contribute to structural unemployment by
keeping wages above the market-clearing level.
Minimum wage laws contribute to structural unemployment by
keeping wages above the market-clearing level.
If international trade lowers the wages of workers in importing industries and increases the wages of workers in exporting industries then this creates an incentive for workers to _____.
leave importing industries and find jobs in exporting industries
Structural unemployment is
long-term and chronic unemployment that exists even when the economy is producing at a normal rate.
In recent years, the rate of unemployment in the U.S. has been ______ than in western Europe.
lower
Wage in equality in the U.S and high unemployment rates in Europe suggest that
many workers are not sharing in worldwide economic growth and prosperity.
Over the past 50 years, __________ people in the U.S. have had jobs and the rate of job growth has __________.
more; slowed
The marginal product of labor is the additional
output produced by one more worker.
The minimum level of compensation that leaves someone indifferent between working and not working is their _____.
reservation price
If the real price of workers' output falls, then the labor demand curve will _____.
shift to the left
An increase in immigration will lead the labor supply curve to _____.
shift to the right
If worker productivity increases, the labor demand curve will _____.
shift to the right
Technological change that affects the marginal products of high-skilled and low-skilled workers differently is called ______ technological change.
skill-biased
Technological change that affects the marginal products of higher-skilled workers differently from those of lower-skilled workers is known as _____- _____ technological change.
skill-biased
_____-_____ technological change is technological change that affects the marginal products of higher-skilled workers differently from those of lower-skilled workers.
skill-biased
The introduction of word processing software that increases the demand for workers with computer skills relative to those without such skills is an example of
skill-biased technological change.
A Luddite is
someone who opposes the introduction of new technologies.
A long-term mismatch between the skills of some workers and the jobs available is a principal cause of ______ unemployment.
structural
A glass blower who is unemployed because his skills are no longer marketable is an example of ______.
structural unemployment
An auto worker in Michigan who loses his job because the company relocated the plant to another country is an example of ________.
structural unemployment
Brayden is an unskilled worker who is currently unemployed. He has been offered a job that pays $40 a day, but he is currently receiving unemployment insurance benefits equal to $50 a day, so he chooses not to accept the job and to continue looking for a better job. Brayden is ______ unemployed.
structurally
In the labor market, households and individuals _______ labor.
supply
A firm will hire a worker if and only if
the value of the marginal product of labor is greater than or equal to the wage rate
In 2016, U.S. real wages were more than ______ (one word) as large as they were in 1960 and more than _____ (one word) times as large as they were in 1929.
twice; five
European labor markets tend to be more regulated than those in the U.S. As a result,
unemployment is higher in Europe.
The extra revenue gained by hiring an additional worker is the _____.
value of the marginal product of labor