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