Chapter_28 - Chapter 28Chapter 28 Unemployment and Its...

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Unformatted text preview: Chapter 28Chapter 28 Unemployment and Its Natural Rate WHATS NEW IN THE THIRD EDITION: A new table on "Alternative Measures of Labor Underutilization" has been added. LEARNING OBJECTIVES: By the end of this chapter, students should understand: the data used to measure the amount of unemployment. how unemployment can result from minimum-wage laws. how unemployment can arise from bargaining between firms and unions. how unemployment results when firms choose to pay efficiency wages. CONTEXT AND PURPOSE: Chapter 15 is the fourth chapter in a four-chapter sequence on the level and growth of output in the long run. In Chapter 12, we learned that capital and labor are among the primary determinants of output and growth. In Chapter 13, we addressed how saving and investment in capital goods affect the production of output. In Chapter 14, we learned about some of the tools people and firms use when choosing capital projects in which to invest. In Chapter 15, we see how full utilization of our labor resources improves the level of production and our standard of living. The purpose of Chapter 15 is to introduce students to the labor market. We will see how economists measure the performance of the labor market using unemployment statistics. We will also address a number of sources of unemployment and some policies that the government might use to lower certain types of unemployment. 1 2 Chapter 28/Unemployment and Its Natural Rate Chapter 28/Unemployment and Its Natural Rate 3 KEY POINTS: 1. The unemployment rate is the percentage of those who would like to work but do not have jobs. The Bureau of Labor Statistics calculates this statistic monthly based on a survey of thousands of households. 2. The unemployment rate is an imperfect measure of joblessness. Some people who call themselves unemployed may actually not want to work, and some people who would like to work have left the labor force after an unsuccessful search. 3. In the U.S. economy, most people who become unemployed find work within a short period of time. Nonetheless, most unemployment observed at any given time is attributable to the few people who are unemployed for long periods of time. 4. One reason for unemployment is the time it takes for workers to search for jobs that best suit their tastes and skills. Unemployment insurance is a government policy that, while protecting workers incomes, increases the amount of frictional unemployment....
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Chapter_28 - Chapter 28Chapter 28 Unemployment and Its...

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