Chapter 8

Chapter 8 - Chapter 8: Workers, Wages and Unemployment in...

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Chapter 8: Workers, Wages and Unemployment in the Modern Economy A. Unemployment: Four Types/Reasons Not all types of unemployment are equal! 1. Frictional a. Definition: Unemployed but actively seeking; job opening available; skills match- the person has the skills to do the job that is available (person can fill the job); sometimes called “search unemployment” because people have to search to make the match b. Short term; desirable; inevitable i) Will always exist because there will always be people entering the labor force, people leaving, new businesses, etc. ii) Makes the individual and the economy more productive—healthy for an economy c. Individuals seeking individual jobs d. Example of Policy: improve the speed at which information about employment is disseminated. Government job database that e-mails potential applicants about job openings. 2. Structural a. Definition: unemployed and actively seeking; job opening available; NO SKILLS MATCH or geographic separation; person will continue to be unemployed b. Long-term; undesirable (wasting resources); inevitable c. Industries are expanding and contracting i) Example: medical industry is expanding, textile industry is contacting people losing jobs don’t have the skills to fill the new jobs 1
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Chapter 8: Workers, Wages and Unemployment in the Modern Economy ii) “Creative Destruction”- people are always coming up with new ideas that create new industries and new jobs. Resources flow in but they have to come from somewhere. The industries they come from are destroyed while another area/industry benefits. d.
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Chapter 8 - Chapter 8: Workers, Wages and Unemployment in...

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