MACRO Ch. 15
cyclical unemployment refers to
short-run fluctuations around the natural rate of unemployment
evidence indicates that the typical person who becomes unemployed will
soon find a job
the labor force equals the
number of people employed plus the number of people unemployed
In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, a labor force of 154 million and employment of 141.6 million. Based on these numbers the unemployment rate was
12.4/154
In June 2009 the Bureau of Labor Statistics reported an adult population of 234.9 million, unemployment of 12.4 million, and employment of 141.6 million. Based on these numbers the laborforce participation rate was
154/234.9
. Suppose that the adult population in the country of Atlantis is 115 million. If 80 million people are employed and 5 million are unemployed, then
30 million are not in the labor force
Since 1960, the natural rate of unemployment in the U.S. has been between
5% and 6%
a typical american worker covered by unemployment insurance receives
50 percent of his former wages for 26 weeks
In one year, you meet 52 people who are each unemployed for one week and eight people who are each unemployed for the whole year (52 weeks). What percentage of the unemployment spells you encountered was short term, and what percentage of the unemployment you encountered in a given week was long term?
86.7% was short term; 13.3 was long term
the reported unemployment rate should be viewed as
a useful but imperfect measure of joblessness
The natural rate of unemployment is the
amount of unemployment that the economy normally experiences
if an unemployed person quits looking for work, then eventually the unemployment rate
and the labor force participation rate both decrease
Which of the following includes everyone in the adult population that the Bureau of Labor Statistics counts as "unemployed"?
anyone who is not employed, is available for work, has looked for work in the past four weeks, and anyone who is waiting to be recalled from a job from which they have been laid off
Suppose there are a large number of men who used to work or seek work who now no longer do either. Other things the same, this makes
both the number of people unemployed and the labor force fall
sectoral changes in demand
create frictional unemployment, while firms paying wages above equilibrium to attract a better pool of candidates creates structural unemployment.
job search
creates frictional unemployment, while firms paying wages above equilibrium to improve worker health creates structural unemployment.
If the natural rate of unemployment is 5.2 percent and the actual rate of unemployment is 5.7 percent, then by definition there is
cyclical unemployment amounting to 0.5 percent of the labor force
the designation "natural" implies that the natural rate of unemployment
does not go away on its own even in the long run
to be counted as "employed" in the U.S. labor force statistics, a person
does not have to be working for pay if they are working for a family business and does not have to be working full time
. The invention of the telegraph led to the loss of jobs for those who had delivered mail by horse but created jobs for telegraph operators and delivery persons. This is an example of
frictional unemployment created by sectoral shifts
people who are unemployed because of job search are best classified as
frictionally unemployed
which of the following helps to reduce frictional unemployment
gov-run employment agencies, public training programs, the internet
efficiency wages
increase productivity but increase unemployment
Over the past several decades in the United States, the labor-force participation rate of women has
increased, and the labor-force participation rate of men has decreased
A person who is counted as "unemployed" by the bureau of labor statistics
is also in the labor force, must have recently looked for work or be on temporary layoff, must be at least 16 years old
The theory of efficiency wages explains why
it may be in the best interest of firms to offer wages that are above the equilibrium level.
the bureau of labor statistics counts discouraged workers as
out of the labor force. If they were counted as unemployed the unemployment rate would be higher.
labor unions
raise wages in unionized industries
The introduction of a union into an industry
raises wages and lowers employment in that industry
a firm may pay efficiency wages in an attempt to
reduce incentives to shirk, reduce turnover, attract a well-qualified pool of applicants
unemployment insurance
reduces search effort which raises unemployment
frictional unemployment is thought to explain relatively
short spells of unemployment, while structural unemployment is thought to explain relatively long spells of unemployment.
most spells of unemployment are
short, but most unemployment observed at any given time is long term.
unemployment that results because the number of jobs available in some labor markets may be insufficient to give a job to everyone who wants one is called
structural unemployment
unions contribute to
structural unemployment
efficiency wages contribute to
structural unemployment and the natural rate of unemployment
Minimum wages create unemployment in markets where they create a
surplus of labor. unemployment of this type is called structural
the bureau of labor statistics defines the unemployment rate as the percentage of
the labor force that is unemployed
in the long run the unemployment rate equals
the natural rate of unemployment
collective bargaining refers to
the process by which unions and firms agree on the terms of employment
the labor-force participation rate measures the percentage of the
total adult population that is in the labor force