ECON 2010 Ch.30
The formula for the labor force participation rate can be written as:
(Employed + Unemployed) ÷ Adult population
In February of 2015, there were 157 million people in the labor force, 8.6 million of whom were unemployed. The unemployment rate in February 2015 was:
5.5%
The U.S. unemployment rate has averaged around ______ since 1950.
6%
According to data from the Bureau of Labor Statistics, approximately what percentage of unemployed workers in 2005 found work in less than 14 weeks?
65 percent
What structural change does Professor Tabarrok suggest is behind the changing labor force participation rates of males and females?
A shift from a manufacturing economy to a service economy
How much of the recent decrease in labor force participation rates could have been predicted from demographics alone?
At least half
Why is structural unemployment worse in Europe than in the United States?
Because of European labor regulations
Why is a prisoner not considered unemployed?
Because prisoners are institutionalized
Why do so many older workers in the United States stay in the labor force past the early retirement age?
Because workers in the United States who want to work past the early retirement age are not heavily penalized.
How did the pill make it easier for women to participate in the paid labor force?
By giving women more control over when children were born
Which statement is TRUE about the pill?
Economists Goldin and Katz argue that the pill lowered the costs of earning a professional degree by giving women greater certainty about the consequences of sex
What impact has technology had on wages?
It has made wages rise more at the top but has held wages down for other jobs.
When is the unemployment rate zero?
Never
What's the good news that this video opens with?
People with postgraduate degrees are earning more than ever before.
How is it established that someone is "actively looking for work" in order to count her as unemployed?
She must have taken some action to find a job in the last four weeks.
How can economists be confident that the pill itself is responsible for the increases in female labor force participation?
States that legalized the pill earlier also had earlier increases in female labor force participation.
Which of the following CAN be true about a person who is officially considered unemployed?
That person has been turned down for employment in the last four weeks.
Does the data support the notion that wages are sticky?
The data supports the notion that wages are sticky in the downward direction.
What is the relationship between the implicit tax rate on older workers and their labor force participation rate?
The higher the implicit tax rate, the lower the labor force participation rate.
In what way is the labor market different from the market for apples when there is unemployment?
The price of labor, wages, is sticky.
What would happen in a product market if the quantity supplied exceeded the quantity demanded?
The price of the good would fall.
The most stringent definition of unemployment is _______, and the least stringent definition of unemployment is _______.
U1; U6
Which of the following correctly describes the calculation of the unemployment rate?
Unemployment rate = unemployed ÷ civilian labor force × 100
What is the first and most obvious reason that low growth is usually accompanied by high unemployment?
When GDP is falling or growing slowly, firms may lay off workers.
How does competition between firms result in frictional unemployment?
When firms compete, some may go out of business or downsize, leaving some workers unemployed.
What is the second and more subtle reason that low growth is usually accompanied by high unemployment?
When workers are sitting idle, so is capital, so the economy is not growing as quickly as it could.
underemployment rate
a Bureau of Labor Statistics measure that includes part-time workers who would rather have a full-time position and people who would like to work but have given up looking for a job
Frictional unemployment is normal for:
a dynamic economy like the United States.
Professor Tabarrok believes that the unemployment caused by labor market friction is:
a small price to pay for a growing and changing economy.
An implicit tax rate captures:
actual taxes paid on income as well as penalties.
Since the end of the Great Recession, the economy has:
added around 200,000 jobs each month.
Professor Tabarrok points out that it can take a long time to:
adjust to shocks that cause structural unemployment.
unemployed
adults who do not have a job but who are looking for work
The video defines the "prime working years" as:
ages 25 to 54.
Unions
an association of workers that bargains collectively with employers over wages, benefits, and working conditions
The big changes in the economy and the small, harder-to-see changes in the economy:
are all important for moving resources from where they have low value to where they have high value.
Goldin, Katz, and Bailey:
are economists who have shown that the pill increased female labor force participation.
Globalization has led to _______, which tends to raise wages for _______.
bigger markets in which to sell goods and services; high-skilled labor
To really see the dynamism of the U.S. labor market in the data, you must look at:
both new hires and new separations.
For high-skilled labor, computers appear to be a _______; for low-skilled labor, computers may be a _______.
complement; substitute
Cyclical unemployment is:
correlated with the ups and downs of the business cycle.
The natural rate of unemployment is the rate of unemployment that would occur if there were no:
cyclical unemployment.
The overall increase in the labor force participation rate since the 1950s is the result of:
dramatic increases in the labor force participation of females and slow decreases in the labor force participation of males.
The labor force consists of:
employed and unemployed workers only.
In European countries where it is hard to fire an employee:
employers are reluctant to hire workers.
Occupational licensing is:
good for incumbent workers but bad for new workers looking to enter an industry.
Through tax and retirement policy:
governments can influence the tradeoff between leisure and work that potential retirees face.
The 19th Amendment:
guaranteed women the right to vote.
A person is considered "employed" if and only if she:
has a job.
The number of startups in the U.S. economy:
has been declining every decade since the 1980s.
Discouraged workers are workers who:
have looked for a job in the past year, but not in the past four weeks.
If an unemployed person gives up looking for a job:
he is no longer counted as unemployed.
As the popularity of the pill spread:
he number of women entering professional degree programs exploded.
The labor force participation rate:
increased from the 1950s until 2000 and then began to fall again.
The unemployment rate:
increases during recessions.
The share of long-term unemployment:
increases with the amount of labor market rigidity, which explains why Europe has more long-term unemployment than the United States.
Restrictive labor law can create two different groups:
insiders, who enjoy long-term stable employment, and outsiders, who end up with high unemployment rates.
In a country that heavily penalizes working past the early retirement age:
it may be the case for many workers that they earn more by retiring than by continuing to work.
When the pill was approved for sale in the United States in 1960:
it was met with a lot of resistance and was even illegal in many places.
discouraged workers
jobless individuals who have given up looking for work but who would still like to find a job
The unemployment rate is:
just one measure of the state of the workforce.
As baby boomers retire, we would expect:
labor force participation rates to fall, since a very large portion of the population is leaving the labor force.
One of the causes of structural unemployment is _______ shocks.
large, quick-hitting, and relatively permanent
After a recession, it typically takes:
longer for the unemployment rate to return to pre-recession levels than for the growth rate to do so.
The wage such that one-half of workers earn wages above it and one-half of workers earn wages below it is the:
median wage.
Unemployment benefits tend to be:
more generous in Europe, and this leads to more and longer spells of unemployment.
Many European countries, such as Italy and Spain, have:
more unemployment than the U.S., with a greater percentage of that unemployment in the form of long-term unemployment.
Someone who does not have a job but is not counted as unemployed, such as a retiree, is:
not in the civilian labor force.
Professor Cowen refers to the percentage of taxi drivers with college degrees to make the point that:
people are graduating from college without the right skills to get the best jobs.
Structural unemployment
persistent, long-term unemployment caused by long-lasting shocks or permanent features of an economy that make it more difficult for some workers to find jobs
Structural unemployment is:
persistent, long-term unemployment.
active labor market policies
policies that focus on getting unemployed workers back to work, such as job-search assistance, job-retraining programs, and work tests
Many European governments are working to reform their retirement systems in order to:
reduce the implicit tax rates for older workers.
In the video, Professor Tabarrok focuses on the labor force participation rate of older males only in order to:
reduce the number of variables and increase clarity.
Frictional unemployment is:
short term unemployment.
frictional unemployment
short-term unemployment caused by the ordinary difficulties of matching employee to employer
The Bureau of Labor Statistics defines and measures:
six unemployment rates.
Professor Cowen summarizes this lecture by saying that the labor market is more about _______ than ever before.
skills
Minimum wages and union contracts:
slow the labor market adjustment process in response to a recession.
Sectors that have historically employed a lot of women:
such as education and health care, have been growing for decades.
Older jobs relied on manufacturing technology and modern jobs rely on computing technology. This demonstrates that:
technology has affected the supply and demand for different kinds of labor.
One of the reasons that employers are reluctant to reduce nominal wages is:
the fear of reducing morale.
When a student graduates from college and begins looking for her first job, she enters:
the labor force as an unemployed worker.
Throughout the twentieth century, and especially since the mid-1960s:
the labor force participation rates of women increased dramatically.
The cause of frictional unemployment is:
the ordinary difficulty of matching employee to employer.
labor force participation rate
the percentage of adults in the labor force
unemployment rate
the percentage of the labor force who are unemployed
employment at-will doctrine
the policy that an employee may quit and an employer may fire an employee at any time and for any reason; the most basic U.S. employment law despite many exceptions to it
Professor Tabarrok seems to suggest that when speaking about changes to unemployment over time, one should use:
the same definition of unemployment every time.
median wage
the wage such that one-half of all workers earn wages below that amount and one-half of all workers earn wages above that amount
Professor Tabarrok believes that:
there is nothing sinister about the official definition of unemployment.
One problem with policies that encourage workers in Europe to retire and collect benefits is that:
these policies are becoming more and more expensive, especially as the population ages.
Most workers won't want to retire until:
they are old enough to begin to collect retirement benefits from the government retirement system.
The video suggests that many people in the developed world who retire do so because:
they've compared the benefits and costs of leisure to the benefits and costs of work.
If statisticians report that the net change in employment for a given month was an additional 200,000 jobs:
this statistic hides the vast amount of job change happening behind the scenes.
The different unemployment rates:
track each other closely, so when one rises, they all rise.
Discouraged workers are:
workers who have given up looking for work but who would still like a job
Counting retired people as unemployed simply because they'd be willing to work if enough money was offered to them:
would make the unemployment rate much less useful.
If you think that the official unemployment rate is too strict and that the real unemployment rate is actually higher:
you can still use the official unemployment rate to see when things are getting better or worse.
