Lecture 1 1-17-2012 - 151 Lecture notes January 17, 2012...

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151 Lecture notes January 17, 2012 Overview of the Labor Market Labor market concepts, definitions, magnitudes, major changes over time, questions and alternative explanations. To provide you some examples of what is coming later in the semester, I list some questions that arise from these data. Examples: --Why are we having a jobless recovery with persistently high unemployment? Why don’t wages fall and bring labor supply and demand back to a full employment level? --Why have wage levels stagnated since 1980, even as productivity has continued to increase? Technological change Globalization 99% argument --Why does pay differ so much among individuals, even among those who have similar skills and experience? --Why has inequality increased since the 1980s? --What policies would reduce unemployment and reduce inequality? 1
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I do not attempt to answer these questions in today’s notes. Stay tuned, though. I will address all of them during the semester. A. Unemployment and Employment Overall unemployment rate: 8.6% - every first Friday of the month - Big effect on stock market - Fisrt to white house 1. Unemployment: alternative measures - 6 different measures -- UE rates are obtained from the CPS, a household survey. BLS issues monthly news release and has historical data on its website: bls.gov. The release contains six different measures of unemployment. --UE definition: requires that you looked for a job in the past 4 weeks and that you are currently available to work . This is the standard definition used in OECD countries. --Workers who have stopped looking for work but willing to work are called discouraged workers ; those who have stopped looking for over a year are called marginally-attached workers . --The most recent (as of December 2011) “official” UE rate is 8.6 percent. 2
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--BLS provides a more expansive definition (U-6 in the BLS reports) that includes discouraged and weakly attached workers as well as involuntarily part-time workers. -- Long-term UE (26 weeks or longer) accounts for nearly half of all UE, versus less than 10 percent before the current recession. The current long-term UE rates are similar to what Europeans experienced in the 1980s and 1990s. See Table 2.4 in the E-S text. 2. Employment --By definition, employment refers only to paid work. It can be as a paid employee or as a self-employed worker (aka “independent contractor”). The term employee refers only to the first of these. The term worker in BLS reports can include both. --Two pictures of employment: from the household survey and from the establishment survey --The establishment survey is drawn from a much larger sample but excludes the self-employed and very new firms. This accounts for most of the difference between the two surveys. --Household survey numbers are subject to large (but smoothed)
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This note was uploaded on 02/21/2012 for the course ECON 151 taught by Professor Staff during the Spring '08 term at University of California, Berkeley.

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Lecture 1 1-17-2012 - 151 Lecture notes January 17, 2012...

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