ECON 7750 Chapter Notes - Chapter 7: Frictional Unemployment, Unemployment Benefits

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7 Mar 2014

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The average rate of unemployment in the us is usually around 5 to 6% Natural rate of unemployment the average rate of unemployment around which the economy fluctuates, the economy gravitates towards this in the long-run. The labor force is the sum of the employed and unemployed: l = e + u. Use this equation to find the steady-state unemployment rate. Substitute e = l u into the equation above to get fu = s(l u), divide by l, and solve for the unemployment rate to find that u/l = 1/1+f/s. This shows that the steady state rate of unemployment (u/l) depends on s and f. Implication: any policy aimed at lowering the natural rate of unemployment must either reduce the rate of job separation or increase the rate of job finding. This will change the natural rate of unemployment. Frictional unemployment unemployment caused by the time that is takes workers to search for a job.

Related Questions

Suppose that there is a fixed number of workers.

Each worker is at a certain instance either employed or unemployed.

The average duration of a period of unemployment is Du=10 months, and the average duration of a period of employment is De = 40 months.

Use the model of labor market flows between these two states to answer the following questions.

1) What is (in rate per month) the rate of job finding (f)?

2) What is the rate of job separation (s)?

3) What is the equilibrium unemployment rate (u)?

blackimpala768

Unemployment is one of the major concerns that people have in todayâs economy, since losing oneâs job can be one of the most devastating events a person can experience. But what do the numbers actually mean? What is the actual state of the economy, in terms of its ability to generate jobs for its citizens?

Questions:

What is the labor force participation rate? What was the labor force participation rate in 2008? How has it changed since 2008 and what does this change imply for the state of the economy? Does the labor force participation rate effect the unemployment rates reported in the media?

How is unemployment measured and reported?

What is a discouraged worker? Are they included in the basic unemployment rate? Are they included in any measure of unemployment? How has the number of discouraged workers changed since 2008? How does the exclusion of the discouraged worker affect the basic unemployment rate reported in the media?

What is frictional unemployment? What is structural unemployment? What is cyclical unemployment? What economic policies should be used to deal with these types of unemployment? Which type is most prevalent in todayâs economy?

Unemployment insurance is designed to help the unemployed. Do these benefits encourage or discourage a person from looking for work? How long should these benefits last?

Does the existence of unions help or hurt the overall economy and the employment rate? Why or why not?

crimsonoyster639

Severe unemployment is socially catastrophic. Mark all items below that can occur due to unemployment.

Increased Spending

Increased work hours for other family members

Increased Savings

Uninterrupted schooling

Increased Stress

Postponed medical care

Utilities cut off

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Question 51 pts

What years was the unemployment rate equal to or great than 10%?

1929-1933, 1937-1938, 1981-1982, 2007-2009

1928-1932, 1936-1937, 1980-1981, 2008-2010

1929-1933, 1936-1937, 1980-1981, 2007-2009

1928-1930, 1937-1938, 1981-1982, 2008-2010

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Question 61 pts

The unemployment rate is understated due to:

None of the above.

Part-time workers being counted as unemployed

Discouraged workers not counted in the labor force

Underemployed workers being counted an unemployed

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Question 71 pts

True or False. The Labor force participation rate is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job.

True

False

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Question 81 pts

True or False. The Bureau of Labor Statistics reports the percentage of labor force unemployed utilizing the current population survey.

True

False

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Question 91 pts

Mark all that apply. Over time the unemployment rate.....

does not fluctuate over time

an upward or downward trend in unemployment rates is apparent

never falls all the way to zero

the timing of rises and falls in unemployment do not match the timing of upswings and downswings in the overall economy

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Question 101 pts

According to the graphs presented by the author in this chapter, which group had the highest unemployment rate in 2010?

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Question 111 pts

According to the information presented by the author in this chapter, which group had the highest unemployment rate in 2015?

New entrants

Re-entrants

Job Losers: non-temporary

Job Leavers

Job Losers: temporary

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Question 121 pts

According to the information presented by the author in this chapter, which group had the highest unemployment rate in 2015?

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Question 131 pts

True or False. An international comparison of unemployment rates across countries can be easily accomplished.

True

False

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Question 141 pts

Mark all that apply. Wages are sticky downward due to:

Implicit contract

Insider-outsider model

Efficiency Wage Theory

Adverse selection of wage cuts argument

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Question 151 pts

Match the word to the correct definition.

Cyclical

[ Choose ] unemployment that occurs as workers move between jobs unemployment that occurs because individuals lack skills valued by employers or the Geographic distribution of jobs changes unemployment closely tied to the business cycle, like higher unemployment during a recession

Frictional

Structural

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Question 161 pts

A financial analyst who quits his/her job in Chicago and is pursuing similar work in Arizona. What type of unemployment occurred?

Structural

Cyclical

Frictional

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Question 171 pts

True or False. With productivity low, average levels of unemployment will tend to be somewhat higher on average.

True

False

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Question 181 pts

True or False. Unemployment benefits in the United States are only federally controlled.

True

False

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Question 191 pts

True or False. The natural rate of unemployment will never be zero due to cyclical and frictional unemployment.

True

False

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Question 201 pts

True or False. Public policies to assist the unemployed as it relates to the supply side of the labor market affect how eager people are to find work

True

False

crimsoncrab890

ECON 7750 Chapter Notes - Chapter 7: Frictional Unemployment, Unemployment Benefits

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