AECO330 Test2

AECO330 Test2 - AECO330 Test #2 Chapter 9 Underutilized...

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AECO330 Test #2 Chapter 9 Underutilized Labor: a. Disguised unemployment-occupation of a job that does not deserve their full time services b. Hidden unemployment-Those engaged in non-employment activities, like working at home or getting an education. This is due to the unavailability of job opportunities that match up with their level of education, or only open to women. c. Prematurely retired-Retirement age is falling as life expectancy increases, this creates job opportunities for younger workers The Lewis Model: This model explains migration from rural to urban areas in developing countries (people did this because the urban wage was greater than their rural wage) No investments in the rural sector, little growth Unproductive labor in traditional sector Disguised unemployment The Harris-Todaro Model: This model views a worker’s decision to migrate based on wages and probability of unemployment, tried to fix on the Lewis model Causes of Unemployment in Developing Countries: The unsuitability of technology-LDC’s don’t adopt appropriate technology because of the process and requirements to produce in the industry. Factor price distortions- Labor increases which leads to lower wages, while capital decreases which leads to higher interest rates. Unemployment among the educated- secondary education system has grown in many LDC’s. Domestic political pressure, foreign aid and grants, but jog market and wages have not adjusted accordingly. Policies to Reduce Unemployment: Population policies-control the population size
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Policies to discourage rural-urban migration-create better jobs in rural sector, and improve quality of life in rural sector, overall investments into development of rural sector. Increase suitability of technology-attain the skill to modify the technology. Invest in building domestic research center. Among tech that is currently available choose the most labor-intensive. Remove factor price distortions-less strict labor-wages laws to companies with higher employment. Encourage/subsidize investment only if it increases employment. Growth based policies
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This note was uploaded on 04/20/2008 for the course AECO 330 taught by Professor Shremoyeemaetra during the Spring '08 term at SUNY Albany.

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AECO330 Test2 - AECO330 Test #2 Chapter 9 Underutilized...

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