midterm-solutions

midterm-solutions - Solutions and Grading Guide for the...

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Solutions and Grading Guide for the BUEC 280 Midterm Prof. Simon Woodcock, Spring 2007 1. Frictional unemployment is the result of normal turnover in the labour market: it takes time for unemployed workers to be matched with open vacancies. [1.5 points] Structural unemployment is the result of structural change in the labour market: it takes time for workers displaced from employment in one sector to become employed in another sector because they need to move, acquire new skills, etc. It is a long-run adjustment problem: it takes time for the economy to move from one equilibrium to another. [1.5 points] So, we see from the preceding that one difference between frictional and structural unemployment is the cause for unemployment (turnover & search frictions vs. structural change). [1 point] The other difference between them is in duration : frictional unemployment is short, structural unemployment is long. [2 points] 2. Most of the decline in male participation is among older men (55-64), who are retiring earlier. [2.5 points] Not clear if this is voluntary (e.g., due increased real wages, home equity, and pension wealth) or involuntary (e.g., due to structural change).
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This note was uploaded on 10/12/2009 for the course BUEC 280 taught by Professor Simonwoodcock during the Spring '07 term at Simon Fraser.

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midterm-solutions - Solutions and Grading Guide for the...

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