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Unformatted text preview: 1 1 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent Chapter 7: The Labor Market, Wages and Unemployment Ruxandra Prodan 2 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent 7.1 Introduction In this chapter, we learn: how a basic supply-and-demand model helps us understand the labor market in the long run. how labor market distortions like taxes and fring costs affect employment in the long run. how to compute present discounted values, and how to value your human capital. a key fact about the labor market: the return to a college education has risen enormously over the last half-century. 3 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent 7.2 The U.S. Labor Market Wages account for ________ of per capita GDP . Average wages have grown at ________ per year for the last century. The employment-population ratio is the fraction of the civilian population over the age of 16 that is working. The ratio has been increasing over time – in large part due to the _______________ into the workforce . The ratio decreases in times of a ________ . 2 4 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent 5 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent The unemployment rate is ________________________________________ A person is unemployed if she does not have a job that pays a wage or salary, she actively looked for a job during the four weeks before measuring the unemployment rate, and she is available to work. 6 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent 3 7 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent The Dynamics of the Labor Market Job creation and job destruction are the gross flows of jobs that are being created and destroyed every month as part of normal changes in the U.S. economy. Can the actual unemployment rate ever be zero? Most spells of unemployment are relatively short (most people find jobs quickly). However, people who are unemployed for long periods account for most of the total weeks of lost work. Many countries have developed social safety nets. These unemployment benefits automatically stabilize short run cycles, but may contribute to higher average unemployment rates. The implications for productivity are _________________________________________ 8 © 2008 by W. W. Norton & Company. Al rights reserved CHAPTER 7 The Labor Market, W ages, and Unem ploym ent 7.3 Supply and Demand The labor demand curve is derived from the firm’s ______________________ ....
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This note was uploaded on 10/02/2010 for the course ACCT 5457 taught by Professor Polm during the Fall '10 term at Rensselaer Polytechnic Institute.

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7 - 1 1 © 2008 by W. W. Norton & Company. Al rights...

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