ECO201 chapter 15

union "insiders" and "outsiders"

"Insiders" -workers who remain employed, they are better off "Outsiders" - workers who lose their jobs, they are worse off Some outsiders go to non-unionized labor markets, which increases labor supply and reduces wages in those markets.

The theory of efficiency wages

firms voluntarily pay above-equilibrium wages to boost worker productivity different ideas about this theory suggest firms may pay higher wages to improve health, turnover, quality and effort

The country of "Awesome" has collected the following information: 1. Adult Population = 240,000 2. Employed = 180,000 3. Unemployed = 30,000 Calculate the labor force, the unemployment rate, and the labor-force rate.

labor force: 180,000 + 30,000 = 210,000 unemployment rate: (30,000/210,000) x 100 = 14.28% labor force rate: (210,000/240,000) x 100 = 87.5%

cyclical unemployment

the deviation of unemployment from its natural rate. It is associated with business cycles.

The natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates

Labor-force participation rate

the percentage of the adult population that is in the labor force (labor force/adult population) x 100

Unemployment rate

the percentage of the labor force that is unemployed (# of unemployed / labor force) x 100

Labor Force

the total number of workers, including both the employed and the unemployed

Who is not included in the labor force by the Bureau of Labor Statistics? A)Anita, who is on temporary layoff B)Lauren, who has retired and is not looking for work C)Raymond, who does not have a job but has applied for several in the last week D)None of the above is correct.

B) Lauren, who has retired and is not looking for work

When unions raise the wage above eq'm,quantity of labor demanded

alls and unemployment results.

unemployed

available for work, tried to find employment during the previous 4 weeks

The amount of unemployment that an economy normally experiences is called the

natural rate of unemployment

Frictional unemployment

unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills. It could be affected by: 1. Job search process 2. Gov't employment and training agencies 3. Unemployment insurance

Structural unemployment

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one. (long term, refers to unions, minimum wage laws, efficiency wages)

Classify each of the following individuals in one of the following categories: employed,unemployed, or not in the labor force. 1.Steve worked 40 hours last week in an office supply store. 2. Last week, Elizabeth worked 10 hours as a computer programmer for the National Video Company and attended night classes at the local college. She would prefer a full-time job. 3. Roger lost his job at the R-gone Manufacturing Company. Since then he has been trying to find a job at other local factories. 4. Linda is a homemaker. Last week she was occupied with her normal household chores. She neither helda job nor looked for a job.Chapter 15: Unemployment

1. employed 2. employed (no hour requirements) 3. unemployed 4. not in labor force

There are 3 reasons for structural unemployment

1.Minimum wage laws 2.Unions 3.Efficiency wages

Tatiana is waiting to be recalled to a job from which she was laid off. Ivan was fired but has not looked for work during the last two months. Who does the Bureau of Labor Statistics count as "unemployed"? A)Tatiana but not Ivan B)Ivan but not Tatiana C)both Ivan and Tatiana D)neither Ivan nor Tatiana

A)Tatiana but not Ivan

Classify each of the following individuals in one of the following categories: employed,unemployed, or not in the labor force. A. Linda's father is unable to work. B. Scott has a Ph.D. He worked full-time but does not like his job as a dishwasher. He has applied for jobs with three companies and five universities. As soon as he gets an offer, he will quit his current job. C. Mary-Helen has been out of work for a full year.She would take a job if it was offered, but no local companies are hiring. She is not actively searching for work.

A. not in the labor force B. employeed C. not in the labor force

People who are unemployed because they are insearch of a job that suits their skills are included within A)structural unemployment. B)frictional unemployment. C)cyclical unemployment. D)marginal unemployment.

B)frictional unemployment.

People who are unemployed because wages are,for some reason, set above the level that brings labor supply and demand into equilibrium are best classified as A)cyclically unemployed. B)structurally unemployed. C)frictionally unemployed. D)discouraged workers.

B)structurally unemployed.

John is a stockbroker. He has had several job offers, but he has turned them down because he thinks he can find a firm that bettermatches his tastes and skills. Curtis has looked for work as an accountant for some time.While the demand for accountants does not appear to be falling, there seems to be more people applying than jobs available. A)John and Curtis are both frictionally unemployed. B)John and Curtis are both structurally unemployed. C)John is frictionally unemployed, and Curtis is structurally unemployed. D)John is structurally unemployed, and Curtis is frictionally unemployed.

C) John is frictionally unemployed, and Curtis is structurally unemployed.

Which of the following is not a commonly-cited explanation for the dramatically increasing labor-force participation rates for women from 1950 to the present? A)availability of reliable birth control B)invention of household labor-saving devices such as dishwashers and microwave ovens C)an increasing number of women who work to support their parents D)changing social attitudes about working mothers

C) an increasing number of women who work to support their parents

Cyclical unemployment A) has a different explanation than does the natural rate of unemployment. B) refers to the year to year fluctuation in unemployment around an economy's natural rate of unemployment. C) is closely associated with short-run ups and downs of economic activity. D) All of the above are correct.

D) All of the above are correct.

Minimum-Wage Laws

The minimum wage may exceed the equilibrium wage for the least skilled or experienced workers, causing structural unemployment. But this group is a small part of the labor force, so the minimum wage can't explain most unemployment.

Unions

a workers' association that bargains with employers over wages, benefits, and working conditions Unions exert their market power to negotiate higher wages for workers.The typical union worker earns 20% higher wages and gets more benefits than a nonunion worker for the same type of work.

not in the labor force

not employed, not unemployed (i.e. full time students, housemakers, retirees)

Pros and Cons of Unemployment Insurance

pros: 1. reduces uncertainty over incomes 2. gives the unemployed more time to search,resulting in better job matches and thus higher productivity cons: 1. It actually increases frictional unemployment 2. UI benefits end when a worker takes a job, so workers have less incentive to search or take jobs while eligible to receive benefits.

Most spells of unemployment are

short, but most unemployment observed at any given time is long term. the small group of long-term unemployed people accounts for most of the unemployment