Figure high unemployment rates in europe ryan w

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Unformatted text preview: abor Market Minimum Wage and Economic Surplus (Figure 5.13) Structural rigidities in the labor market will result in wages set above equilibrium and high levels of unemployment. Figure : Changes in Economic Surplus from Minimum Wage Laws Ryan W. Herzog (GU) Labor Market February 5, 2014 27 / 40 Explaining Trends in the Labor Market Reducing Inequality(Figure 5.14) Reducing the supply of low skilled labor needs to come through education. Figure : Closing the Wage Gap Ryan W. Herzog (GU) Labor Market February 5, 2014 28 / 40 Unemployment Measuring Unemployment How do we measure unemployment? We ask a few basic questions. 1 2 3 Employed: A person is employed if he or she is working full or part-time. This includes individuals on vacation or sick leave. Unemployed: A person is unemployed if he or she did not work during the preceding week but made some effort to find work in the past four weeks. Out of the Labor Force: A person is considered to be out of the labor force if he or she did not work in the past week and did not look for work in the past for weeks. These individuals are not employed or unemployed. Examples include full-time students, unpaid homemakers, retirees, those institutionalized, and people unable to work because of disabilities. An individual is unemployed if they are working age and have been actively searching for employment in the last four weeks. Ryan W. Herzog (GU) Labor Market February 5, 2014 29 / 40 Unemployment Two Key Measures of Unemployment Unemployment Rate = Number of Unemployed / Labor Force. Labor Force Participation Rate = Labor Force / Working Age Population. For the United States: Unemployment Rate = 7.5% Total Unemployed = 11.6 million Total Employed = 143.5 million Labor Force Participation Rate = (11.6 + 143.5) / 239.6 = 63.3% Ryan W. Herzog (GU) Labor Market February 5, 2014 30 / 40 Unemployment Example Calculated the unemployment rate if the labor force is 150 million people and 120 million are employed? First find the number of unemployed (labor force less employed) Find the unemployment rate = (150 - 120) / 150 = 20%. Ryan W. Herzog (GU) Labor Market Febru...
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