ECONOMICS 100B-7 (2-6-07) - Economics 100B Professor Steven...

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Economics 100B Professor Steven Wood 2/06/07 Lecture 7 ASUC Lecture Notes Online (formerly Black Lightning) is the only authorized note-taking service at UC Berkeley. Please do not share, copy or illegally distribute these notes. Our non-profit, student-run program depends on your individual subscription for its continued existence. These notes are copyrighted by the University of California and are for your personal use only. Sharing or copying these notes is illegal and could end note taking for this course ANNOUNCEMENTS The most recent statistics from the Department of Labor shows that non-farm payroll employment rose by 111,000 in January. The unemployment rate was essentially unchanged at 4.6%. In December it was 4.5%, so essentially unchanged means it ticked up a little bit. Job-growth occurred primarily in the service-providing industries (not surprising considering that makes up 70% of jobs). Manufacturing jobs slid yet again while construction increased. Total employment is now 137.3 million. In November 2006 we had an increase of 196,000 and 206,000 in December. Throughout 2006, the average increase was 187,000 per month making January’s numbers fairly unenthusiastic. LECTURE The Employment Situation In the short-run we can assume fixed capital and technology, and thus an increase in the labor-force should yield us more output according to our basic Solow Model. It’s important to remember however that we cannot read into a single month’s numbers to form an opinion. We generally want to look at 6 to 12 month trends. The problem with GDP analysis is that their numbers are only published quarterly. If our production function holds, however, our employment levels can tell us how much output we have. Beyond the Basic Solow Growth Model Basic Solow Growth Model 1) Y/N depends on v, n-dot, δ , and A 2) Changes in Y/N depend upon changes in v, n-dot, or A. These will alter our- steady-state point. y-dot at the steady state however will NOT change except when we have a change in n-dot. Assumptions in the Basic Model 1) Assumes that all countries have a similar level of technology, A. We know today that this is not true. 100 Years ago however, there was a lot less differentiation between countries in terms of technology. This seemed like a reasonable assumption 100 years ago. 2) Assume that all countries have similar labor force growth (n-dot), savings rates (v), and depreciation ( ). While we know that this is not true, there is generally not a big difference between countries. 3)
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This note was uploaded on 09/20/2009 for the course ECON ECON taught by Professor Shomali during the Spring '04 term at University of California, Berkeley.

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ECONOMICS 100B-7 (2-6-07) - Economics 100B Professor Steven...

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