Econ 102 Final Exam Review Guide

Econ 102 Final Exam Review Guide - Econ 102 Final Exam...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Econ 102 Final Exam Review Guide Ch. 15: Unemployment Measured in three categories: o Employed : paid employees, self-employed, and unpaid workers in a family business o Unemployed : not working but have looked for work in the past 4 weeks o Not in the labor force : everyone else Unemployment rate : 100x(# of unemployed/labor force) o Typically, most unemployment spells are short (1/3 of unemployed have not had a job for under 5 weeks, 2/3 are under 14 weeks of unemployment) o Natural Rate : the normal rate at which the actual unemployment rate fluctuates from Frictional Unemployment: occurs when workers take their time to find work that best fits their skills and tastes (short-term for most workers) Structural Unemployment: occurs when there are more workers than jobs (usually more long-term) o Cyclical Unemployment : the deviation of unemployment from the natural rate (related with business-cycles) LFP rate : 100x (labor force/population) Problems with the U-rate: o Does not account for discouraged workers o Does not distinguish between full-time and part-time, and for part-time work occurring because of a lack of full-time jobs o Some people misreport their work status in the BLS survey Job Search : o Job search is the process of matching jobs with workers, where workers have different skills and tastes and jobs have different requirements o Sectoral shifts are changes in the composition in demand across an industry or a region of the country o The economy is always changing, so some frictional unemployment should be expected Unemployment Insurance : o Government program that aids peoples’ incomes when they become unemployed o Increases frictional unemployment because it reduces incentives for people to get a job because the benefits end once a job begins o Reduces uncertainty about future incomes and gives the unemployed more time to search, creating better job matches and higher productivity Structural Unemployment : o Occurs when there aren’t enough jobs, and often occurs when wage is kept above equilibrium; there are three reasons for this: Min. Wage Laws :
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The wage law may be set above equilibrium for the least skilled types of workers (only a small portion of the labor force in the U.S.) Unions : A worker association that bargains for workers with employers over wages, benefits, and working conditions The average union worker has a 20% higher wage and receives more benefits than a non-union worker of the same work level When unions raise the wage above equilibrium they drive Q of labor demand down and unemployment rises Insiders ”: workers who keep their job Outsiders ”: workers who lose their job. Some of them will go to non-unionized jobs which decrease unemployment and lower wages in those markets Critics: unions are cartels. They raise wages above equilibrium causing unemployment and/or depressing wages in non-union markets Advocates: unions counter the market power of large firms,
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 05/23/2011 for the course ECON 102 taught by Professor Rossana during the Fall '08 term at University of Michigan.

Page1 / 22

Econ 102 Final Exam Review Guide - Econ 102 Final Exam...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online