Labor Markets

Labor Markets - Labor Markets and Unemployment I Labor...

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Labor Markets and Unemployment I. Labor Supply A. Labor Force – the number of working-age, civilian, non-institutionalized people (henceforth called “adult pop”) who are either employed or unemployed. Labor Force = # employed + # unemployed 2 key ratios: 1. Labor Force Participation Rate = (labor force)/(adult pop). 2. Unemployment rate (µ) = (# unemployed)/(labor force). B. Unemployment 1. Natural Rate of Unemployment – a “normal” or average rate of unemployment. This term leaves much to be desired. It obviously depends on what sort of time frame is being considered; the average unemployment rate for the last 30 years is 6.17%, but the average rate over the last 10 years is 4.94%. 2. Cyclical unemployment – deviations from the natural rate due to upswings or slowdowns in the economy. 3. Measurement difficulties a. overestimation: b. underestimation: discouraged workers lead to underestimation of the true unemployment rate.
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4. Types of unemployment: a. frictional unemployment – results from costs associated with matching the right workers with the right jobs. b. structural unemployment – results when there is insufficient demand for workers in a given labor market due to changes in technology, or in the demand for the g/s. c. seasonal unemployment – from systematic changes throughout the year. d. induced unemployment – government (or other) institutions can cause unemployment. C. Labor Supply Curve – there are many different labor markets associated with the many different skill sets that workers may have. 1.
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This note was uploaded on 04/29/2008 for the course ECON 2020 taught by Professor Kaplan,jul during the Spring '08 term at Colorado.

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Labor Markets - Labor Markets and Unemployment I Labor...

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