ECO 252 Chapter 15

Some frictional unemployment is inevitable because

there are changes in the demand for labor among different firms.

A minimum-wage law tends to

create more unemployment in low-skill job markets than in high-skill job markets

Labor-force participation rate equation

(labor force / adult population) x (100)

Unemployment rate equation

(number of unemployed / labor force) x (100)

Unemployment from a wage above the equilibrium level:

- At the equilibrium wage, the quantity of labor supplied and quantity of labor demanded cross - If the wage is forced to remain above the equilibrium level, the quantity of labor supplied rises and the quantity of labor demanded falls. The resulting surplus of labor represents unemployment.

If the unemployment rate falls, we can be certain that more workers have jobs.

False. It could be that some workers have become discouraged and quit looking for jobs.

Unemployed

Includes those who were not employed, were available for work, and had tried to find employment during the previous four weeks. It also includes those waiting to be recalled to a job from which they had been laid off.

An accountant with a CPA designation who has been unable to find work for so long that she has stopped looking for work is considered to be

Not in the labor force

Which one of the following types of unemployment results from the wage being held above the competitive equilibrium wage?

Structural Unemployment

The natural rate of unemployment is the amount of unemployment that won't go away on its own, even in the long run

True

Whenever the wage rises above the competitive equilibrium, regardless of the source, the result is additional unemployment.

True

Unemployment insurance

a government program that partially protects workers' income when they become unemployed

Union

a worker association that bargains with employers over wages, benefits, and working conditions

Efficiency wages

above-equilibrium wages paid by firms to increase worker productivity

Sectoral shifts tend to raise which type of unemployment?

frictional unemployment

Which of the following types of unemployment will exist even if the wage is at the competitive equilibrium?

frictional unemployment

Which of the following is not a characteristic of minimum-wage workers? They tend to be

full-time

Unions tend to increase the disparity in pay between insiders and outsiders by

increasing the wage in the unionized sector, which may create an increase in the supply of workers in the non-unionized sector.

Discouraged workers

individuals who would like to work but have given up looking for a job

According to the Bureau of Labor Statistics, a husband who chooses to stay home and take care of the household is

not in the labor force

Labor force equation

number of employed + number of unemployed

Unions might increase efficiency in the case where they

offset the market power of a large firm in a "company town."

Which of the following government policies would fail to lower the unemployment rate?

raise the minimum wage

Cyclical unemployment

the deviation of unemployment from its natural rate

The amount of unemployment that the economy normally experiences is known as

the natural rate of unemployment.

Natural rate of unemployment

the normal rate of unemployment around which the unemployment rate fluctuates

Strike i

the organized withdrawal of labor from a firm by a union

Labor-force participation rate

the percentage of the adult population that is in the labor force

Unemployment rate

the percentage of the labor force that is unemployed

Collective bargaining

the process by which unions and firms agree on the terms of employment

Job search

the process by which workers fine appropriate jobs given their tastes and skills

Labor force

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

Not in the labor force

this category includes those who fit neither employed or unemployed categories, such as full-time students, homemakers, and retires.

Employed

this category includes those who worked as paid employees, worked in their own business, or worked as unpaid workers in a family member's business. Both full-time and pat-time workers are counted. This category also includes those who were not working but who had jobs from which they were temporarily absent.

In post-World War II United States, the labor-force participation rate has been rising for women and has been falling for men

true

Fractional 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