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30 terms

Chapter 10 - Unemployment

STUDY
PLAY
Bureau of Labor Statistics
- produces data on unemployment, length of the avg workweek, and duration of unemployment every month (survey of 60,000 households)
Employed
work as paid employees, in own business, unpaid worker in family business (part time full time, were not working but had jobs that they were temporarily absent from)
Unemployed
those who were not employed, were available for work, and had tried to find employment during the previous 4 week
Not in labor force
full time student, homemaker, or retired
Labor force
total number of workers
Labor force =
number employed + number unemployed
Unemployment rate =
# of unemployed/labor force
Labor force participation rate =
labor force/adult population
Natural rate of unemployment
the normal rate of unemployment around which the unemployment rate fluctuates
Cyclical unemployment
the deviation of unemployment from its natural rate
Does unemployment rate measure what we want it to?
hard to distinguish b/w a person who is unemployed and a person not in the labor force, more than 1/3 of unemployed are recent entrants into the labor force, almost 50% leave labor force because they cannot find employment
Unemployment statistics difficult to prove:
unemployed may not be trying hard to get a job, calling themselves unemployed to qualify for government programs, working but paid "under the table" to avoid taxes
Discouraged workers
individuals who would like work but have given up on looking for a job
Ideal labor market
wages would adjust to balance the quantity of labor supplied and demanded
Frictional unemployment
results because it takes time for workers to search for the jobs that are best suited for them
Structural unemployment
when a quantity of labor supplied exceeds quantity of labor demanded (often thought to explain longer spells of unemployment)
Job search
the process by which workers find appropriate jobs given their tastes and skills
Sectoral shifts
changes in the composition of demand among industries or regions
Unemployment insurance
a government program that partially protects workers' incomes when they become unemployed (increases frictional unemployment, 50% of former wages for 26 weeks)
Minimum wage laws
surplus of labor because minimum wage is greater that equilibrium
Unions
worker associations that bargain with employers over wages, benefits, and working conditions (wages are not determined by equilibrium)
Collective bargaining
the process by which unions and firms agree on the terms of employment
Strike
an organized withdrawal of labor from a firm by a union (reduced production, sales, and profit)
Wagner Act of 1935
prevents employers from interferring in unions and bargain with unions in good faith
NLRB
enforces workers right to unionize
Efficiency wages
above equilibrium wages paid by firms to increase worker productivity
Worker health
better paid workers eat a more nutritious diet, making them healthier and more productive
Worker turnover
the more a firm pays its workers, the less often they will choose the leave, reducing turnover
Worker quality
when a firm pays a high wage, it attracts a better pool of workers to apply for its jobs and increases the quality of workforce
Worker effort
higher wages make workers more eager to keep their jobs and thereby give workers an incentive to put forward their best effort