Chapter 15: Unemployment and its Natural Rate Flashcard Example #15807

How is unemployment measured?
Current population survey
What is the current population survey?
Unemployed, employed and not in labor force.
What is considered employed?
Included part time, self-employed, 16yrs and older
What is considered unemployed?
Willing and able to work. Searched for work in the four weeks preceding the survey.
What is considered not in the labor force?
Full-time student, retiree, basically not looking for work or have worked in a while.
What is the labor force?
The employed and the unemployed
How do you calculate the unemployment rate?
Unemployed/employed
How do you calculate the labor force participation rate?
Labor force/adult population
How long is long-term unemployment?
Over 27 weeks
What are discouraged workers?
Wanted to work but gave up working.
What is natural rate of unemployment?
The normal rate of unemployment around which the unemployment rate fluctuates.
How do you calculate the natural rate of unemployment?
Frictional unemployment + Structural unemployment
What is frictional unemployment?
It takes time for workers to search for jobs, usually short term.
What is unemployment insurance?
Receive %50 of former wages for 26 weeks, also increases frictional unemployment.
What is structural unemployment?
Labor supply exceeds labor demand due to non-economic causes.
What happens to unions and collective bargaining in structural unemployment?
Insiders are better off but outsiders are worse off.
Are unions good or bad for the economy as a whole?
Inefficient and inequitable
What are efficiency wages?
Above equilibrium wages paid by firms in order to increase worker productivity. Increase worker health, effort and quality and reduce worker turnover.

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