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20. Lecture_Unemployment_Job_Search_1 - Midterm 2 on...

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   
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 Midterm 2 on Thursday Office hours: Wednesday 1-3p, by appointment Today Unemployment Job Search
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 At beginning of semester – Individuals maximize utility Firms maximize profit Perfect competition Perfect information First deviations: Discrimination – (1) Taste – firms do not profit maximize, (2) statistical – imperfect information To explain Unemployment must again deviate *Information Sticky wages
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   E w D S E* w*
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      E w D S E* w* w min E min Excess supply = unemployed
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       Although the unemployment rate in the United States drifted upward between 1960 and 1990, the economic expansion of the 1990s reduced the unemployment rates substantially. The recent economic recession has led to a substantial increase in unemployment rates.
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        0 5 10 15 20 25 30 1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 Year Unemployment Rate
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   National unemployment rate (U/LF) as of March – 9.6% Around 5% was considered “normal” Illinois 9.9% (Sept.), Michigan 13%, Wyoming 6.8% http://www.bls.gov/LAU/
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        0 2 4 6 8 10 12 1994 1996 1998 2000 2002 2004 2006 Year Unemployment Rate Official unemployment rate Official + marginally attached workers Official + marginally attached workers + part- time workers available for full-time work
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       0 2 4 6 8 10 12 14 16 1970 1980 1990 2000 2010 Year Unemployment Rate High school dropouts College graduates High school graduates
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      Less educated Young Minorities (by race) Industries: agriculture, construction
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   Even a well-functioning competitive economy experiences
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