Unformatted text preview: EC 151 Ch: 15 Unemployment and its Natural rate
Identifying unemployment Job search Minimum wage laws Unions and collective bargaining The theory of efficiency wages Agenda The problem of unemployment is usually divided in two categories: Examine 3 questions: LR SR Look at reasons why economies always experience some unemployment Look at what policymakers can do to help the unemployed Discuss four explanations for the economy's natural rate of unemployment: How does the government measure the economy's rate of unemployment? What problems arise in interpreting the unemployment data? How long are the unemployed typically without work? Job search Minimumwage laws Unions Efficiency wages Identifying unemployment How is unemployment measured? Employed Unemployed Not in the labor force Labor force Unemployment rate Labor force participation rate Identifying unemployment Identifying unemployment Natural rate of unemployment Cyclical unemployment Case study: LaborForce Participation of Men and Women in the US economy Does unemployment rate measure what we want it to? Not straight forward Movement into and out of the labor force New entrants Many unemployment spells end with a person leaving the labor force
Discouraged workers Some unemployed do not try to find work Most spells of unemployment are short, and most unemployment observed is long term example How long are unemployed without work? Why are there always some people unemployed? Frictional unemployment Job search Structural unemployment
Minimumwage laws Unions Efficiency wages Job search Why some frictional unemployment is inevitable? Public policy and job search Unemployment insurance Minimum wage laws Price floor (example) Any time a wage is kept above the equilibrium the result is unemployment Unions and collective bargaining Unions The economics of Unions
Collective bargaining Strike Are unions good or bad for the economy? The theory of efficiency wages Efficiency wages
Worker health Worker turnover Worker effort Worker quality Case study: Henry Ford and the Very Generous $5aday Wage ...
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