Economics chapter 15
Cyclical Unemployment
The deviation of unemployment from its natural rate.
Know the definition of discouraged workers
They are counted as part of the adult population but not as part of the labor force who would like to work but have given up looking for a job
2) Know the Formula of Unemployment Rate
Unemployment Rate: The percentage of the labor force that is unemployed. Formula: Unemployment Rate= (Number of unemployed/Labor Force) * 100
Frictional unemployment
Unemployment that results because it takes time for workers to search for the jobs that best suit their tastes and skills
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
The Normal rate of unemployment
around which the unemployment rate fluctuates.
1) Know the Formula and Definition of Labor Force
Labor Force: The total number of workers, employed and unemployed. Formula: Labor Force = Number of employed + Number of Unemployed.
3) Know the Formula of Labor Force Participation Rate
Labor-force participation rate: The percentage of the adult population that is in the labor force. Formula: Labor-force participation rate= (Labor Force/Adult population)*100
Know the reasons for decline in men's labor-force participation
Longer schooling, Increased stay-at-home dads, early retirement, longer lives.
Right -to-work laws
give workers in a unionized firm the right to choose whether or not to join the union
The Natural Unemployment Rate
it includes both frictional and structural unemployment
Minimum Wage Laws
An increase in minimum wage would decrease the quantity of labor demanded while increasing the quantity supplied and increases the unemployment rate of teenagers and unskilled labor
Look at the case study in Henry Ford and the very generous $ 5-A-Day
Hint: Henry Ford created the assembly line in 1914. Workers were never sick, tired, or absent. He gave them $5 a day (which in that time was worth one month's groceries). WHY? Because workers were more efficient. Henry Ford believed that paying $5 a day would increase worker's productivity
