ECON 103 CHAPTER 7
If s is the rate of job separation, f is the rate of job finding, and both rates are constant, then the unemployment rate is approximately
s/(s+f)
Economists call the changes in the composition of demand among industries and regions
sectoral shifts
where there is structural unemployment, the real wage is
rigid at a level above the market-clearing level
which of the following characteristics made the 2008-2009 recession differ most sharply from previous recessions
a large spike in the duration of unemployment
unions contribute to structural unemployment when collective bargaining results in wages
above the equilibrium level
if the underground economy is larger in europe than in the united states, then the difference in the ___ number of hours worked between europe and the united states may be smaller than the difference in the ___ numbers of hours worked
actual; measured
entry into and exit from the labor force are important to the determination of the unemployment rate because
almost one-half of all spells of unemployment end in the unemployed person's withdrawal from the labor market
the earned income tax credit
does not raise labor costs
paying efficiency wages helps firms reduce the problem of moral hazard by
encouraging unsupervised workers to maintain a high level of productivity
economist robert barro attributes the increase in the duration of unemployment to ___ while economist paul krugman attributes the increase duration to ____
expanded unemployment-insurance coverage, insufficient consumer demand
as the relative demand for unskilled workers falls, wages for unskilled workers ___ and unemployment compensation becomes a ___ attractive option
fall; more
more frequent holidays for workers in europe than in the united states contribute to
fewer hours worked per year by the average employed person in europe than the average employed person un the united states
unemployment caused by the time it takes workers to search for a job is called ____ unemployment
frictional
short term unemployment us most likely to be ___ unemployment while long term unemployment is mostly likely to be ___ unemployment
frictional; structural
many economists attribute part of the recent increase in european unemployment to
generous benefits from unemployed workers
a spell of unemployment begins when a person leaves his or her job or
has been without a job for at least four weeks
The minimum wage:
has its greatest impact on teenage unemployment
in the case of unions the conflict of interest between different groups of workers results in insiders wanting ___ ,while outsiders want ___
high wages; more hirings
which of the following hypotheses is consistent with fewer hours worked per year in europe than in the united states
higher tax rates in europe than in the united states
which of the following statements correctly describes European labor markets
in recent years the average unemployment rate in Europe has been higher that the unemployment rate in the united states
if wage rigidity holds the real wage above the equilibrium level, and increase in the supply of labor will____ the number employed
increase
across countries of Europe, greater spending on unemployment insurance tends to ___ unemployment and more active labor market policies tend to ___ unemployment
increase; decrease
the unemployment insurance system may be desirable because unemployment insurance
induces workers to reject unattractive job offers
much of the difference in unemployment rates across Europe is attributable to differences in
long-term unemployment
results from the Euro-Barometer Survey series suggests that people ate happier when inflation is ___ and unemployment is
low;low
earlier retirement in europe than in the united states contributes to
lower employment to population ratios in europe than in the united states
Sectoral shifts:
make frictional employment inevitable
transitions into and out of the labor force
make unemployment statistics difficult to interpret
government policies directed at reducing frictional unemployment include:
making unemployment insurance 100 percent experience rated
all of the following statements about minimum wage workers in the United States are correct except
minimum wage workers are more likely to be male
In recent years, Europe has experienced ______ unemployment than the United States, and employed Europeans work ______ hours than employed Americans.
more;fewer
data on unemployment un the united states show that
most weeks of unemployment are attributable to the long-term unemployed
when outsiders have a greater role than do insiders in the wage-bargaining process, the negotiated wage is likely to be ____ the equilibrium wage
much closer to
when insiders have a much greater impact on the wage-bargaining process than do outsiders the negotiated wage is likely to be ___ the equilibrium wage
much greater than
most spells of unemployment are ___ term, and most weeks of unemployment are attributable to ___ term unemployment
short; long
unemployment insurance increases the amount of frictional unemployment by
softening the economic hardship of unemployment
the unemployment resulting from wage rigidity and job rationing is called
structural unemployment
the unemployment resulting when real wages are held above equilibrium is called ____ unemployment, while the unemployment that occurs as workers search for a job that best suits their skills is called ___ unemployment
structural; frictional
European unemployment rates are positively correlated with each of the following except:
the amount of coordination among employers in bargaining with unions
The natural rate of unemployment is
the average rate of unemployment around which the economy fluctuates
if the steady state rate of unemployment equals 0.125 and the fraction of employed workers lose their jobs each month (the rate of job separations) os 0.56, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:
0.08
if the steady state rate of unemployment equals 0.10 and the fraction of employed workers lose their jobs each month (the rate of job separations) os 0.02, then the fraction of unemployed workers who find jobs each month (the rate of job findings) must be:
0.18
economists who have studied minimum-wage laws in the United States find that a 10 percent increase in the minimum wage increases teenage unemployment by about
1 to 3 percent
if the fraction of employed workers who lose their jobs each month (the rate of job separations) is 0.01 and the fraction of the unemployed who find a job each month is 0.09 ( the rate of job findings) then the natural rate of unemployment is
10 percent
the percentage of workers who belong to unions in the united states is approximately
13 percent
in past nonrecessionary periods, a typical worker in the United States who is covered by unemployment insurance receives ____ percent of his or her former wages for ____weeks
50;26
suppose that over the course of a year 100 people are unemployed for 4 weeks each while 10 people are unemployed for 52 weeks each. Approximately what percentage of the total weeks of unemployment were attributable to the long-term unemployed
56.5 percent
The natural rate of unemployment in the United states since 1950 has averaged between ______ and _______ percent
5;6
Frictional unemployment is inevitable because
the demand for different goods always fluctuates
policies to substantially reduce the natural rate of unemployment should be targeted at
the long term unemployed
one efficiency- wage theory implies that firms pay high wages because
the more a firm pays its workers, the greater their incentive to stay with the firm
In a steady state
the number of people finding jobs equals the number of people losing jobs
the generosity of unemployment insurance benefits is measured by
the replacement rate and the duration of benefits
Frictional unemployment is unemployment caused by:
the time it takes workers to search for a job
which of the following is not a proposed explanation for the fact that Americans on averaged work 20 percent more hours than the typical resident of western Europe
the underground economy is larger in america than in europe
when the real wage is above the level that equilibrates supply and demand
thee quantity of labor supplied exceeds the quantity demanded
All of the following are reasons for frictional unemployment except
unemployed workers accept the first job offer that they receive
If the number of employed workers equals 200 million and the number of unemployed workers equals 20 million, the unemployment rate equals ____ percent
9 percent
suppose that over the course of a year 100 people are unemployed for 4 weeks each while 10 people are unemployed for 52 weeks each. Approximately what percentage of the total spells of unemployment were attributable to the long-term unemployed
9 percent
In the model of the steady state unemployment rate with a fixed labor force, the rate of job finding equals the percentage of the ___ who find a job each month, while the rate of job separation equals the percentage of the ___ who lose their job each month
unemployed; employed
The macroeconomic problem that affects individuals most directly and severely is
unemployment
All of the following are causes of structural unemployment except
unemployment insurance
all of thee following policies were adopted by the government in an attempt to reduce the natural rate of unemployment except:
unemployment insurance
examples of active labor market policies include all of the following except
unemployment insurance
the recent reduced demand for unskilled workers relative to skilled workers has led to ___ for unskilled workers in Europe compared to ___ for unskilled workers in the United States
unemployment; lower wages
workers unemployed as a result of wage rigidity are
waiting for a job to become available
discouraged workers are individuals who
want a job but have given up looking for one
A policy that decreases the job separation rate _____ the natural rate of unemployment.
will decrease
A policy that increases the job-finding rate _____ the natural rate of unemployment.
will decrease
spells of unemployment end when the unemployed person finds a job or
withdraws from the labor force
according to studies of individual unemployed workers, these workers are most likely to find a job
within a few weeks of their unemployment insurance running out
which of the following is the best example of structural unemployment
Kirby is seeking a job as an airline pilot, but the high union wages in the industry have limited the number of job available
in 2007 in the united states among labor force members ages 16 to 19, the highest unemployment rate was for
black males
which of the following statements most closely describes the variation in unemployment rates across countries in Europe
countries with higher rates of unionization tend to have higher unemployment rates, but this is partially mitigated if wage negotiations are coordinated among employers
which of the following is an example of frictional unemployment?
dave searches for a new job after voluntarily moving to San Diego
if wage rigidity holds the real wage above the equilibrium level, an increase in the demand for labor will ___ the number unemployed
decrease
when henry ford paid his workers $5 per day when the prevailing wage was between $2 and $3 a day
it raised the efficiency of his workers
one reason for unemployment is that
it takes time to match workers and jobs
which of the following rankings (from most severe to least severe) best captures the degree of hardship associated with various types of unemployment
job losers, job leavers, marginally attached
public policy to increase the job finding rate include ____ and public policy to decrease the separation rate include ____
job training programs; 100 % experience rated unemployment insurance
differences in unemployment rates across demographic groups are most closely correlated with differences in
job-separation rates
by paying efficiency wages, firms contribute to higher unemployment because they
keep the wage above equilibrium level
during the period from 1990 to 2006 in the united states most spells of unemployment lasted
less than one month, yet most of the weeks of unemployment occurred in spells lasting two or more months
compared with an employed white teenage male, and employed middle aged white male is ___ likely to become unemployed, and once unemployed is ___ likely to find a job
less; just as
The unemployment rate in the United States since 1952 has
never been close to 0
Firms currently have incentives to temporarily lay off workers because firms typically are charged for ___ of workers unemployment benefits
only a part
discouraged workers are counted as
out of the labor force
centralized union wage bargaining with government intervention in Sweden gives relatively more influence to ___ while firm-level union wage bargaining in the United states gives relatively more influence to ___
outsiders; insiders
most current unemployment insurance programs are
partially experience rated
wage rigidity
prevents labor demand and labor supply from reaching the equilibrium level
according to efficiency-wage theories, firms benefit by paying higher than equilibrium wage because worker____ increases
productivity
paying efficiency wages help firms reduce the problem of adverse selection by
providing an incentive for the best qualified workers to reaming with the firm
Permitting a lower minimum wage for teenagers would likely
raise unemployment among unskilled adults
efficiency-wage theories suggest that a firm may pay workers more that the market clearing wage for all of the following reasons except to
reduce the firm's wage bill
Any policy aimed at lowering the natural rate of unemployment must either ____ the rate of job separation of ____ the rate of job finding
reduce; increase