Policies that alter the steady state growth rate of

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Unformatted text preview: Unemployment is not equally distributed with age. The rate for teenagers is more than 3 times that of people 45- 54. Education also affects employment prospects. There is high variation across age groups of job separation. Young people are not certain of career plans so they have a higher rate of separation. Also, unemployment varies greatly across regions, with the unemployment rate in Newfoundland and Labrador twice the national average and Alberta’s half the national average. However it is difficult to reform the unemployment insurance system. Page 19 of 52 Jessica Gahtan Prof: Mokhles Hossain Macroeconomics ECON2000 Fall 2013 Trends in unemployment: generally increasing natural rate of unemployment could be due to: Demographics: changing composition of the work force (women), and baby- boomers all entering around the same time. Sectoral shifts: sectoral shifts are more prevalent, these increase job separation and frictional unemployment. Productivity: decreases in productivity growth causes rising unemployment, and skill- biased technical change results in a higher demand for skilled workers, putting unskilled workers out ob their jobs. Transitions into and out of the labour force: some individuals calling themselves unemployed may not be seriously looking for a job and may best be viewed as not in the labour force. Discouraged workers have given up looking and are counted as being out of the labour force. Their joblessness, though not measured, may still be a social problem. Adding part- time workers who want to be full- time to the unemployment rate increases it, as does transferring discouraged workers into the unemployed category. SKIPPED CHAPTER: 6.5 Chapter 7 The Solow growth model shows how saving, population growth, and technological progress affect the level of an economy’s output and its growth over time. Y = F(K, L) Divide by labour to obtain Y/L = F(K/L, 1). y = Y/L is output per worker and k = K/L is capital per worker. We can then write the production function as y = f(k), where f(k) = F(k, 1). The slope of this production function is the marginal product of capital, MPK = f(k+1) – f(k). The graph exhibits diminishing marginal product of capital. Page 20 of 52 Jessica Gahtan Prof: Mokhles Hossain Macroeconomics ECON2000 Fall 2013 The...
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