CH 15

structural unemployment

arises from a mismatch between the jobs available in some labor markets and the skills of workers

cyclical unemployment

the form of unemployment associated with business cycles

Labor Force

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

Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.00. Which of the following statements are true? Check all that apply

- If the minimum wage is set at $12.50, the market will not reach equilibrium. - Binding minimum wages cause structural unemployment. - In the absence of price controls, a surplus puts downward pressure on wages until they fall to the equilibrium.

Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal?

- Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks -Establishing government-run employment agencies to connect unemployed workers to job vacancies -Improving a widely used job-search website so that it matches workers to job vacancies more effectively

Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? Check all that apply.

- Paying higher wages enhances workers to adopt healthier lifestyles, enhancing their productivity. - Higher wages attract a more competent pool of workers.

Based on this information, which of the following are characteristics of the establishment survey? Check all that apply.

- only counts the jobs of wage and salary workers on nonfarm payrolls - tends to undercount newly created jobs among new companies.

Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.

- they have given up on looking for a job - they have not looked for a job in 4 weeks (or longer), but they would like a job and are available for work.

Labor Force Participation Rate = ________

100 * (# in Labor Force/Adult Population)

Unemployment Rate = ______

100 * (# of unemployed / labor force)

U-4

100*(Unemployed + Discouraged)/ (Labor Force + Discouraged)

Antonio is a 70-year-old professor. He teaches only one or two courses a year, but he's still pursuing an active research agenda.

Employed

Dmitri is a 43-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago.

Not in labor force

Frances is a 13-year-old student at East Valley Middle School. She babysits her younger brother and does other chores, so her parents give her an allowance of $25 per week.

Not in the adult population

Jake is a 17-year-old who just graduated from high school. He is taking it easy this summer, relaxing by the pool with his friends and family, and volunteering part-time at the local nursing home.

Not in the labor force

Jake recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work.

Structural

Natural Rate of Unemployment

Structural + Frictional

Caroline is a 36-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet.

Unemployed

Latasha is a 26-year-old who lost her job as a copy editor for a local newspaper. She has spent the past few weeks out of work and interviewing for other editing jobs. She is thinking about going back to grad school if her job search doesn't succeed after a few more weeks.

Unemployment

Based on this information, which of the following are characteristics of the household survey? Check all that apply.

covers all workers, including the self employed

Automobile demand has fallen during a recent recession, and Rosa has been laid off from her job on the assembly line.

cyclical

Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will ___________. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will ______________. The temporary unemployment resulting from such sectoral shifts in the economy is best described as ______________ unemployment.

decrease, increase, frictional

Latasha just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal.

frictional

frictional unemployment

occurs because job seekers and employers need time to find one another

Excluding discouraged workers from the official unemployment rate may cause the official rate to __________ the true extent of underemployment.

understate