Econ Chapter 28
Sectoral shifts, frictional unemployment, and job searches Suppose the world price of steel falls substantially. The demand for labor among steel-producing firms in Pennsylvania will _________. The demand for labor among automobile-producing firms in Michigan, for which steel is an input, will _______. The temporary unemployment resulting from such sectoral shifts in the economy is best described as ______ unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply.
Decrease Increase Frictional Establishing government-run employment agencies to connect unemployment workers to job vacancies.
Types of unemployment The three people described in the following table are categorized as unemployed by the Bureau of Labor Statistics. Identify each person in the table as structurally, frictionally, or cyclically unemployed. Juanita just moved with her husband to Portland, Oregon. She's looking for a job as a paralegal. Gilberto recently lost his job as a dishwasher. Minimum-wage legislation keeps employers from adding more of the low-skill positions for which he qualifies, so he has been unable to find work. Automobile demand has fallen during a recent recession, and Neha has been laid off from her job on the assembly line.
Frictional Structural Cyclical
The theory of efficiency wages Why might some firms voluntarily pay workers a wage above the market equilibrium, even in the presence of surplus labor? Check all that apply.
Higher wages attract a more competent pool of workers. Paying higher wages encourages workers to be more productive. Paying higher wages can reduce a firm's training costs.
Measuring employment, unemployment, and labor force participation Complete the right half of the following equation to reflect the labor force participation rate reported by the BLS. Labor Force Participation Rate = __________ According to this formula, what is the labor force participation rate of this economy of six people? Complete the right half of the following equation to reflect the unemployment rate reported by the BLS. Unemployment Rate = ___________ According to this formula, what is the unemployment rate of this economy of six people?
100 X (Number in labor force)/(Adult Population) 80% 100 X (Number in Unemployed Workers)/(labor force) 50%
Discouraged workers The following table contains U.S. employment information from June 2019. Civilian Population (persons 16 yrs. old & over): 259,037,000 Employed (person): 157,005,000 Unemployed (person): 5,975,000 Discouraged (person): 425,000 The Bureau of Labor Statistics has several measures of joblessness in addition to the official unemployment rate. One alternative is the U-4 measure of labor underutilization, which is calculated as follows: U-4 = 100 X (unemployed + Discouraged)/(Labor force + Discouraged) Fill in the following table by calculating the official unemployment rate and the U-4 measure of labor underutilization. Offical Unemployment Rate (%): _______ U-4 Measure of Labor Underutilization (%): ________ The official unemployment rate and the U-4 measure of labor underutilization are two different measures of joblessness in the economy. If the Bureau of Labor Statistics were to include discouraged workers in the official unemployment rate, the reported unemployment rate would _______
3.67 3.92 Increase
Minimum-wage laws and unemployment Consider the market for labor depicted by the demand and supply curves that follow. Use the calculator to help you answer the following questions. You will not be graded on any changes you make to the calculator. Complete the following table with the quantity of labor supplied and demanded if the wage is set at $15.00. Then indicate whether this wage will result in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in the table. For example, type in 100 for 100,000 workers. Wage: $15.00 Labor Demanded (thousands of workers): ______ Labor Supplied (Thousand of Workers): ______ Shortage or Surplus? _______ Suppose a senator considers introducing a bill to legislate a minimum hourly wage of $15.00. Which of the following statements are true? Check all that apply.
450 750 Surplus Binding minimum wages cause structural unemployment. in the absence of price controls, a surplus put downward pressure on wages until they fall to the equilibrium. If the minimum wage is set at $15.00, the market will not reach equilibrium.
Contrasting labor union laws in two states Consider two states that adopt different laws concerning labor unions. The following graph shows the labor market in a state in the North. Initially, the market-clearing wage there is $8.00 per hour. Suppose that the legislature in this northern state passes laws that make it easy for workers to join a union. Through collective bargaining, the union negotiates a wage of $10.00 per hour. Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this graph. Enter $10.00 into the box labeled Wage on the previous graph. Hint: Be sure to pay attention to the units used on the graph. At the union wage, _________ union workers will be employed.
600,000
Measuring employment, unemployment, and labor force participation Consider a small economy composed of six people: Charles, Dina, Gilberto, Juanita, Neha, and Lorenzo. Each person's employment status is described in the following table. Based on the criteria used by the Bureau of Labor Statistics (BLS), identify each person's status as employed, unemployed, "not in the labor force" (if not in the civilian labor force but still part of the adult population), or "not in the adult population" if not in the civilian adult population. Charles is a 43-year-old autoworker who was laid off from his job 6 months ago. He is frustrated with his inability to find a new full-time position. Last week, he took a part-time job but was given only 3 hours of work. Dina is a 40-year-old autoworker who was just laid off by her employer. She is trying to find any kind of job to help make ends meet. Gilberto is a 43-year-old accountant who has been out of work for almost a year. He became so discouraged that he gave up on his job search a couple of months ago. Neha is a 31-year-old science teacher who taught at West Valley Middle School last year. Due to budget cuts, she was laid off at the end of the school year. It's the summer now, and after a few weeks of vacation with her family, she is looking for a part-time job as a tutor. Lorenzo is a 20-year-old American Studies major at the University of Tennessee. It's summer now, and he is working as a lifeguard in Mobile, Alabama. Juanita is a 11-year-old student at Southside Middle School. She babysits her younger sister and does other chores, so her parents give her an allowance of $20 per week.
Charles: Employed Dina: Unemployed Gilberto: Not in the labor force Neha: Unemployed Lorenzo: Employed Juanita: Not in the adult population
Types of unemployment The following table shows data on frictional, cyclical, structural, and total unemployment for an economy. Table: Unemployment Type; Rate (%) Frictional; 3.0 Cyclical: 0.0 Structural: 1.0 Total unemployment: 4.0 True or False: This economy is not currently at its natural rate of unemployment.
False
Discouraged workers Which of the following statements correctly describe discouraged workers? (If none of the choices apply, leave all of the checkboxes blank.) Check all that apply.
The have given up on looking for a job.
Contrasting labor union laws in two states The following graph shows the labor market in a state in the South. The legislature in this state passes strong "right-to-work" laws that make it very difficult for unions to organize workers, so the wage is always equal to the market-clearing value. Except for this difference in legislation, the two states are very similar. The initial position of the graph corresponds to the initial labor market condition in the southern state before the labor union negotiated the new, higher wage for workers in the northern state. Suppose that after the wage goes up in the northern state, some workers in the northern state lose their jobs and decide to move to the southern state. Adjust the graph to show what happens to employment and wages in the southern state. Which of the following groups are worse off as a result of the union action in the northern state? Check all that apply.
move the supply a little down Employers in the northern state Workers who find new jobs in the southern state