ECON 222 Ch.15
natural rate of unemployment
refers to the amount of unemployment that the economy normally experiences
cyclical unemployment
refers to the deviation of unemployment from its natural rate → closely associated with ups/downs of economic activity
unemployment rate
(# of unemployed / labor force) * 100
labor force participation rate
(labor force / adult population) * 100
unemployment and time
Most spells of unemployment are short, and most unemployment observed at any given time is long-term → most people who become unemployed will soon find jobs → most of the economy's unemployment problem, however, is attributable to the few who are jobless for long periods of time
unemployment insurance
a gov program that partially protects workers' income when they become unemployed → increases frictional unemployment → gives unemployed more time to search for better job matches and thus results in higher productivity
union
a worker association that bargains with employers over wages, benefits, and working conditions → "insiders" benefit from high union wages → "outsiders" do not get union jobs → when unions raise wages in one part of the economy, the supply of labor increases in other parts of the economy (which in turn reduces wages in industries that are not unionized)
efficiency wages
above-equilibrium wages paid by firms to increase worker productivity theory explanations include: → worker health → worker turnover → worker quality → worker effort
strike
an organized withdrawal of labor from a firm by a union
employed
category of the population includes paid employees, those self-employed, unpaid workers in family businesses
unemployed
category of the population includes those not employed, were available for work, and had tried to find employment during the previous 4 weeks also includes those waiting to be recalled from a job layoff
sectoral shifts
changes in the composition of demand across industries or regions → temporarily cause unemployment
not in the labor force
everyone else not in EMPLOYED or UNEMPLOYED categories
discouraged workers
individuals who would like to work but have given up looking for a job → do not show up in unemployment statistics, tho they are unemployed
collective bargaining
the process by which unions and firms agree on the terms of employment
job search
the process of matching workers with appropriate jobs → gov employment agencies provide info about job vacancies to speed up the matching process → public training programs aim to equip workers displaced from declining industries with new skills
labor force
the total number of workers, including both the employed and unempoyed
frictional unemployment
unemployment that results because it takes time for workers to search for the jobs that best suit their taste and skills → inevitable because the economy is always changing
structural unemployment
unemployment that results because there a fewer jobs available than workers because wage is above equilibrium wage → minimum wage laws → unions → efficiency wages
