Homework 9: Unemployment

Frictional unemployment is inevitable because

sectoral shifts are always happening

Frictional unemployment is thought to explain relatively

short spells of unemployment, while structural unemployment is thought to explain relatively long spells of unemployment.

Most spells of unemployment are

short, but most unemployment observed at any given time is long-term.

Cyclical unemployment refers to

short-run fluctuations around the natural rate of unemployment

Evidence from research studies by economists

shows that increased unemployment benefits decrease the job search efforts of the unemployed

The labor-force participation rate measures the percentage of the

total adult population that is in the labor force.

Unemployment insurance reduces the incentive for the unemployed to find and take new jobs.

true

Refer to table 28-1. How many in the sample are in the labor force?

10

The natural rate of unemployment includes

both frictional and structural unemployment.

When a union bargains successfully with employers, in that industry,

both wages and unemployment increase.

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

The unemployment rate is computed as the number of unemployed

divided by the labor force, all times 100.

Gwen is an unpaid worker in her family's restaurant. The Bureau of Labor Statistics counts Gwen as

employed and in the labor force.

Suppose that some country had an adult population of about 46 million, a labor-force participation rate of 75 percent, and an unemployment rate of 8 percent. How many people were unemployed?

2.76 million

Refer to Table 28-1. How many in the sample are unemployed?

3

Refer to Figure 28-1. If the government imposes a minimum wage of $8, then how many workers will be unemployed?

4,000

In 2018 the Bureau of Labor Statistics reported that there were 57.4 million people over age 25 whose highest level of education was some college or an associate degree. Of these, 36.3 million were employed and 1.2 million were unemployed. What were the labor-force participation rate and the unemployment rate for this group?

65.3% and 3.2% (labor force participation rate = employed + unemployed / adult population) (unemployment rate = # of unemployed / employed + unemployed)

An economist claims that changes in information technology and unemployment insurance have reduced unemployment. Which of these changes affect frictional unemployment?

Both the changes in information technology and unemployment insurance.

Which of the following is an explanation for the existence of frictional unemployment?

Job search

Suppose that garbage collectors and landscaping workers have no unions. Now suppose that garbage collectors form unions. What does this do to the labor supply and wages of landscaping workers?

Labor supply increases, and wages decrease.

A firm might offer better efficiency wages in order to attract a better pool of applicants.

True

A firm might offer efficiency wages in order to reduce shirking.

True

A union is a type of cartel.

True

According to the theory of efficiency wages, it may be profitable for firms to keep wages high even in the presence of a surplus of labor.

True

Frictional unemployment is often the result of changes in the demand for labor among different firms.

True

If the number of people unemployed rose but the number of people employed and the adult population stayed the same, then the labor force participation rate would rise.

True

It is best to view the official unemployment rate as a useful but imperfect measure of joblessness.

True

The unemployment rate never falls to zero.

True

There are always some workers without jobs, even when the overall economy is doing well.

True

Providing training for unemployed individuals is primarily intended to reduce

frictional unemployment.

Sandy has graduated from college and is devoting her time to searching for a job. She has seen plenty of openings but has not yet been offered one that best suits her tastes and skills. Sandy is

frictionally unemployed. Frictional unemployment can exist even in the long run.

Right-to-work laws

give workers in a unionized firm the right to choose whether to join the union.

Over the past several decades, the difference between the labor-force participation rates of men and women in the U.S. has

gradually decreased.

Efficiency wages refer to

increase productivity but increase unemployment

An increase in the minimum wage above the equilibrium wage

increases structural unemployment

The theory of efficiency wages explains why

it may be in the best interest of firms to offer wages that are above the equilibrium level.

Josh is a full-time college student who is not working or looking for a job. The Bureau of Labor Statistics counts Josh as

not in the labor force.

The labor force equals the

number of people employed plus the number of people unemployed.

Sam has no job but keeps applying to get a job with a business that is unionized. He is qualified and he finds the pay attractive, but the firm is not hiring. Sam is

structurally unemployed. Structural unemployment exists even in the long run.

Minimum wages create unemployment in markets where they create a

surplus of labor. Unemployment of this time is called structural.

Minimum wage laws are most likely to affect the wages paid to

teenagers

The natural rate of unemployment,

varies less than the measured unemployment rate