Principles of Macroeconomics Module 2 Ch 7 Notes.docx -...

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Principles of Macroeconomics 201 Module 2 Notes- Ch 7 Unemployment Rates Did you know that males face higher unemployment rates than females? During the 2008-2009 recession, the unemployment rates of both males and females shot up, but occupations dominated by male workers experienced the largest job losses. Another interesting trend can be found in the labor force participation rates of males and females. Although male labor force participation rates are higher than that of females, the male labor force participation rate has been steadily dropping while the female labor force participation rate has been steadily rising. Are men slowly disappearing from the labor force? According to CNN Money, “In the 1950s, nearly every man in his prime working years was in the labor force, a category that includes both those who are employed and those actively applying for jobs. The "participation rate" for men aged 25 to 54 stood at 97.7% in early 1956, but drifted downward to a post-war record low of 88.4% at the end of 2012.” Incentives What may be driving the lower labor force participation rates of men? Economists point to various socio-economic trends to help explain this phenomenon, including higher incarceration rates for males, the expansion of Social Security Disability Insurance, and fewer opportunities in the manufacturing sector. As the comparative advantage of the United States shifts towards more high-skilled professions, those without proper training and education tend to get left behind. In terms of higher education, the trend is also significant: In the 1960s, more men than women were enrolling in and completing college. "That's completely reversed itself," according to Gary Burtless, a senior fellow at the Brookings Institution. "Women's persistence and enrollment rates have given them a real edge over men." Could it be that the incentives facing men and women differ, and that as a society it’s time to reevaluate some of the programs and policies currently in place? Unemployment The Labor Force Participation Rate is the proportion of non-institutionalized working-age individuals who are employed or seeking employment. Unemployment is the total number of adults (aged 16 years or older) willing and able to work and who are actively looking for work but have not found a job. Unemployment creates a cost to the entire economy in terms of lost output often ranging in the billions of dollars. The Labor Force are the individuals aged 16 years or older who either have jobs or who are looking and available for jobs; the number of employed plus the
Principles of Macroeconomics 201 Module 2 Notes- Ch 7 number of unemployed. The unemployment rate is the percentage of the measured labor force that is unemployed. Figure 7-2 Adult Population Figure 7.3 The Logic of the Unemployment Rate Duration of unemployment • More than a third of job seekers find work within one month • Approximately another third find employment within a second month • About a sixth are still unemployed after six months

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