Macroeconomics Chapter 11: Unemployment and Labor Force Participation

Examples of labor regulations

1. unemployment benefits 2. unions 3. minimum wage

What does it mean to be unemployed?

Adult workers who do NOT have a job but are looking for work.

Who makes up "Adult non-institutionalized civilians"

Adults not in the labor force & labor force

Union

An association of workers that bargain collectively with employers over wages, benefits, and working conditions.

Structural unemployment

Is 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. * Long-term unemployment is a year or longer

Natural unemployment

Is the rate of structural plus frictional unemployment. * Frictional and structural unemployment are natural rates and change slowly while cyclical unemployment moves a lot quicker * Cyclical can become structural if workers remain unemployed for too long

Median wage

Is the wage such that one-half of all workers earn wages below the median and one-half of all workers make above the median.

How to find the labor force participation rate?

Labor force / (adult non-institutionalized civilians)

Frictional unemployment

Short-term unemployment caused by the ordinary difficulties of matching employee to employer. As some jobs and industries die out, other newer ones are created, this is called "creative destruction".

Employment at-will doctrine

States that an employee may quit and an employer may fire an employee at any time and for any reason. There are many exceptions to this doctrine but it is the most basic U.S. employment law.

What is the labor force participation rate?

The percentage of adults in the labor force.

What is the unemployment rate? Who measures the statistics? And who is included as unemployed?

The percentage of the labor force without a job. Found by the Bureau of Labor Statistics. Their measurement includes part-time workers who would rather have full-time positions and people who would like to work but have given up looking for a job.

Cyclical unemployment

Unemployment correlated with the ups and downs of the business cycle. *Lower economic growth and lower GDP growth creates higher unemployment and visa-vera *A "jobless recovery" or jobless growth is an economic phenomenon in which a macroeconomy experiences growth while maintaining or decreasing its level of employment.

Discouraged worker

Workers who have given up looking for work but who would still like a job.

The unemployment rate measures the a) share of the labor force that is unemployed. b) number of discouraged workers. c) quality of jobs. d) number of underemployed workers.

a) share of the labor force that is unemployed.

Who is part of the labor force? a) a homemaker b) a person who was laid off and is now looking for work c) a full-time student d) a retiree

b) a person who was laid off and is now looking for work

Discouraged workers are workers who have a) given up looking for work and are not available for work. b) given up looking for work but would still like a job. c) not given up looking for work but are not available for work. d) not given up looking for work and still would like a job.

b) given up looking for work but would still like a job.

Cyclical unemployment is a) natural unemployment. b) unemployment correlated with the business cycle. c) 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. d) short-term unemployment caused by the ordinary difficulties of matching employee to employer.

b) unemployment correlated with the business cycle.

Structural unemployment is a) caused by the ordinary difficulties of matching employee to employer. b) unemployment correlated with the business cycle. c) caused by long-lasting shocks or changes in permanent features of an economy. d) natural unemployment.

c) caused by long-lasting shocks or changes in permanent features of an economy.

An unemployed person is one who a) is not willing to work even though he or she is able to. b) stays at home and is not looking for work. c) does not have a job but is actively looking for one. d) works for a job that pays less than he or she expected.

c) does not have a job but is actively looking for one.

The labor force consists of a) employed workers. b) adult non-institutionalized civilians. c) employed workers and adults who do not have jobs but who are looking for work. d) adults who do not have a job but who are looking for work.

c) employed workers and adults who do not have jobs but who are looking for work.

The invention of birth control in pill form substantially ______ labor force participation. a) increased male b) decreased male c) increased female d) decreased female

c) increased female

Over the past few decades, the U.S. economy has switched from a primarily manufacturing economy to a service economy. Many individuals working in manufacturing positions lost their jobs, and many new jobs opened up in services. For those who lost jobs in manufacturing, this is an example of a) industry unemployment. b) frictional unemployment. c) structural unemployment. d) cyclical unemployment.

c) structural unemployment.

During the 2007-2009 recession, which type of unemployment increased the most? a) frictional unemployment b) structural unemployment c) search unemployment d) cyclical unemployment

d) cyclical unemployment

Increases in the minimum wage will most likely lead to a) higher living standards for low-income workers. b) lower wages in complement industries. c) increases in worker education programs. d) higher unemployment.

d) higher unemployment.

Frictional unemployment is a) unemployment due to fluctuations in the business cycle. b) long-term employment caused by a mismatch between the skills workers possess and the skills that the market is looking to hire. c) persistent and long-term unemployment caused by shocks that make it more difficult for workers to find jobs. d) short-term unemployment due to the normal difficulties of matching employers and employees.

d) short-term unemployment due to the normal difficulties of matching employers and employees.

The natural unemployment rate is the rate of ______ unemployment plus the rate of ______ unemployment. a) cyclical; structural b) cyclical; frictional c) frictional structural; cyclical d) structural; frictional

d) structural; frictional

Cyclical unemployment can turn into structural unemployment if a) a recession lasts longer than a year. b) the government extends the unemployment benefits. c) the economy develops stagflation. d) workers remain on unemployment benefits for too long.

d) workers remain on unemployment benefits for too long.

Who makes up the the labor force?

employed & unemployed

How to find the unemployment rate?

unemployment rate= unemployed / labor force