Chapter 6

Chapter 6 - Medium Run: The Labor Market (Blanchard ch. 6)...

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Medium Run: The Labor Market (Blanchard ch. 6) Prof. Irina A. Telyukova UCSD Econ 110A Spring 2008
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2 Outline We have learned about the goods and financial markets. We will now study the labor market – another crucial element of the economy. s Wage determination occurs in the labor market. s Price determination occurs when firms, major players in the labor market, decide how to price their product. s The interplay between wage and price detemination will help us determine the equilibrium rate of unemployment.
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3 I. Labor Market in the U.S., 2006 Noninstitutional population: 228.8 million s Civilian labor force: 151.4 million h Employment: 144.4 million h Unemployment: 7.0 million h Unemployment rate: 4.6% s Participation rate: 66.2 % s Out of labor force: 77.4 million h But want a job now: 4.8 million
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4 Labor Market in the U.S., 2006 Noninstitutional population: 228.8 million s Civilian labor force: 151.4 million h Employment: 144.4 million h Unemployment: 7.0 million s Participation rate: 66.2 % s Out of labor force: 77.4 million Men 110.6 m / Women 118.2 m 81.3 m / 70.2 m 77.5 m / 66.9 m 3.8 m / 3.2 m 73.5 % / 59.4 % 29.4 m / 48 m
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5 Labor Market: Healthy or Not? Can we tell from the unemployment rate whether or not the conditions in the labor market and the economy in general are good? s What if the unemployment rate is low? s …and labor force participation rate has recently fallen? s What if the unemployment rate is high? s …and people are stuck in unemployment for a long time? (Few separations , few hires b stagnant unemployment pool) s …and people get in and out of unemployment quickly? (Many separations, many hires b active labor market)
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6 U.S. Flows In and Out of Unemployment: Nov 2007 s 4.5 million separations s 2.45 million quits s 1.8 million layoffs s 4.0 million job openings s 4.7 million hires s 7.6 million unemployed s Average duration of unemployment: 17.5 weeks
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7 II. Unemployment Rate in Historical Perspective Source: BLS 2 3 4 5 6 7 8 9 10 11 12 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
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8 Unemployment Rate: Trend 2 3 4 5 6 7 8 9 10 11 12 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
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9 Unemployment Rate: Cycles 2 3 4 5 6 7 8 9 10 11 12 1960 1963 1966 1969 1972 1975 1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 Recession Recession Recession Recession Recession ?
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This note was uploaded on 04/29/2008 for the course ECON 110A taught by Professor Staff during the Spring '08 term at UCSD.

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Chapter 6 - Medium Run: The Labor Market (Blanchard ch. 6)...

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