Unemployment%20Notes - 15 UNEMPLOYMENT LEARNING OBJECTIVES:...

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259 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. 15 UNEMPLOYMENT
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260 v Chapter 15/Unemployment KEY POINTS: 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. 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 and therefore are not counted as employed. 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. One reason for unemployment is the time it takes for workers to search for jobs that best suit their tastes and skills. This frictional unemployment is increased as a result of unemployment insurance, a government policy designed to protect workers’ incomes. A second reason why our economy always has some unemployment is minimum-wage laws. By raising the wage of unskilled and inexperienced workers above the equilibrium level, minimum-wage laws raise the quantity of labor supplied and reduce the quantity demanded. The resulting surplus of labor represents unemployment. A third reason for unemployment is the market power of unions. When unions push the wages in unionized industries above the equilibrium level, they create a surplus of labor. A fourth reason for unemployment is suggested by the theory of efficiency wages. According to this theory, firms find it profitable to pay wages above the equilibrium level. High wages can improve worker health, lower worker turnover, raise worker quality, and increase worker effort. CHAPTER OUTLINE: I. Unemployment can be divided into two categories. A. The economy’s natural rate of unemployment refers to the amount of unemployment that the economy normally experiences. B. Cyclical unemployment refers to the year-to-year fluctuations in unemployment around its natural rate. II. Identifying Unemployment A. How Is Unemployment Measured? 1. The Bureau of Labor Statistics (BLS) surveys 60,000 households every month. 2. The BLS places each adult (age 16 or older) into one of three categories: employed, unemployed, or not in the labor force.
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Chapter 15/Unemployment v 261 3. Definition of labor force : the total number of workers, including both the employed and the unemployed .
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This note was uploaded on 11/07/2010 for the course ECONOMICS 212 taught by Professor Gaminde during the Spring '10 term at University of Miami.

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Unemployment%20Notes - 15 UNEMPLOYMENT LEARNING OBJECTIVES:...

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