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Unemployment - Wal-Mart the high cost of low price Wagner...

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Macroeconomics Unemployment 3 questions to answer: 1) How does the government measure our unemployment? 2) What are the problems with the interpretation? 3) How long are the unemployed without work? 4 Explanations for natural rate of unemployment 1) Job search 2) Minimum wage 3) Unions 4) Efficiency wages How is unemployment measured? - BLS measures from current population survey - Looks at people 16+ Employed : Those who worked or temporarily absent workers (sick, bad weather for construction workers) Unemployed: Those who actively seek work in last 4 weeks but are not employed. Also included, laid off seasonal workers Labor Force: Total number of workers, including both employed and unemployed LF=#Employed+#Unemployed Not in Force : those that are not actively seeking work Unemployment Rate : The percent in the labor force that is unemployed UR=(#Unemployed/LF)x100 US: 4.9% China: 9.8%
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Unformatted text preview: Wal-Mart: the high cost of low price Wagner Act of 1935 prevents employers from interfering when workers try to organize-National Labor Relations Board: (NLRB) is government agency that enforces workers right to unionize Good: gives markets power to workers Bad: Increases unemployment and distorts wages Ugly: like any political position there is an opportunity for corruption, union leaders can be bribed Efficiency Wages: Above equilibrium wages paid by firms to increase worker productivity 4 Reasons why this may be optimal 1) Worker health: better-paid worker have better nutrition and are healthier = more prod. 2) Worker turnover: higher wage – less likely to quit 3) Worker Quality: higher wages attract higher skilled workers 4) Worker effort: If caught shirking – will get fired. Higher wages=higher cost of losing job...
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