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### 24 Cards in this Set

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 What is economy's "natural" rate of unemployment? This is the amount of unemployment that the economy normally experiences. What is "cyclical" unemployment? This is the year-to-year fluctuation in unemployment around its natural rate. What organization measures unemployment? The Bureau of Labor Statistics (BLS) - part of the Department of Labor. How many households does the BLS survey to measure unemployment? About 60,000. What is the "Current Population Survey" This is the name of the 60,000 households that are polled to collect unemployment data. The BLS places each adult surveyed into one of these three categories: Employed Unemployed Not in the labor force How is the labor force determined. Labor force= Number Employed + Number Unemployed How is the unemployment rate determinted Number Unemployed / Labor Force * 100 What is the Labor Participation Rate? Labor Force / Adult Population * 100 What is the natural rate of unemployment in the United States since 1960? About 5.5 % How does employment for women compart to that of men? Women have lower rates of labor-force participation than men, but once in the labor force, women have similar rates of unemployment. How does employment for blacks compare to that of whites? Blacks have similar rates of labor-force participation as whites and much higher rates of unemployment. How does employment for teenagers compare with that of the entire popluation Teenagers have lower rates of labor-force participation and much higher rates of unemployment than the overall population. How does labor-force participation for men and women compare between 1950 and 2001 From 1950 to 2001, labor force participation for women has gone from 33% to 60% and labor force participation for men has gone from 87% to 74%. What accounts for the changes in labor-force participation for women between 1950 and 2001 New household technologies. Improved birth control ( smaller families ) Changing political & social attitudes. Why are statistics regarding unemployment difficult to interpret? Some reasons are: some who qualify as unemployed may not be looking for work. Some who qualify as unemployed may actually be working. Some who qualify as out of the labor force may actually want to work. What is a discouraged worker? This is a worker that has given up on finding a job and does not qualify as unemployed even though he is truly a worker w/o a job. What seemingly contradictary result about unemployment duration does study of data reveal? Most spells of unemployment are short and most unemployment observed at any given time is long term. What are the two categories of explanations for why some people are always unemployed? Frictional unemployment Structural unemployment What is frictional unemployment? Frictional unemployment is the period of unemployment that results from a transition between jobs. What is a downside of unemployment insurance? Unemployment insurance reduces the financial incentive to take a new job and when terms of a new job are being negotiated, job security is less important. What are three causes for structural unemployment? Minimum Wage Laws Unions Efficiency Wages What do all three causes for structural unemployment have in common. They all elevate the actuall wage above the equlibrium wage determined by supply & demand curves. What are 4 justifications for efficiency wages? 1. Improve worker health. 2. Decrease worker turnover. 3. Improve worker effort ( by creating scary unemployment pool ) 4. Improve worker quality - get the better workers.