Chapter 15

Front 1

What are the 4 types of Unemployment

Back 1

Structural
Frictional
Cyclical
Seasonal

Front 2

What makes up the Labor Force?

Back 2

The Employed and the Unemployed

Front 3

Labor Force =

Back 3

Employed + Unemployed

Front 4

Unemployment Rate =

Back 4

(# of unemployed / labor force) * 100

Front 5

Labor-Force (Employed and Unemployed) Participation Formula =

Back 5

(Labor Force / Adult Population) * 100

Front 6

What agency in the United States measures Unemployment?

Back 6

the B.L.S. (Bureau of Labor Statistics)

Front 7

How often does the B.L.S. collect its data?

Back 7

It collects its data monthly from people aged 16(+) roughly 60,000 households and reports on its findings.

Front 8

"Employed" people...

Back 8

Have worked as...
1. A paid worker
2. Worked in their OWN business

3. Unpaid worker in family business
4. All full-time and part-time workers
5. Those who are temporarily absent from work.

Front 9

"Unemployed" people...

Back 9

1. Those who were not employed.
2. Being available to work and wanting to work.
3.Have looked for work for previous 4 weeks
4. Recalled from a job since being laid off.

Front 10

"Not in the Labor Force" people...

Back 10

Those who do not fit in either "Unemployed" or "Employed" categories. Full time students, retirees, military personnel, and homemakers.

Front 11

What does the Labor Force Participation Rate measure?

Back 11

Measures the percentage of the total adult population that has CHOSEN to partake in the labor market.

Front 12

Natural Rate of Unemployment is . . .

Back 12

The predicted rate that unemployment will take over time given previous statistics.

Front 13

Can -or- should unemployment rate = 0.0%?

Back 13

Nope. The 4 types of unemployment prevent this.`

Front 14

People who fall out of the Labor Force because they're no longer consider unemployed after a certain amount of time...

Back 14

The Discouraged Worker

Front 15

The 4 Causes of Unemployment:

Back 15

1. Job Search
2. Unions
3. Minimum-Wage Laws
4. Efficiency-Wage Theory

Front 16

Sometimes Unexpected "Deviation" from the predicted Natural Rate of Unemployment is called...

Back 16

Cyclical Unemployment. This happens during recessions and is related to business cycles. Can be really harmful to the economy, and in worst cases can take a government stimulus to fix the problem.

Front 17

Most spells of unemployment are short, and most unemployment observed is long-term. True or False?

Back 17

True :
-Imagine 4 observed people. 1 is always different each time observed while the other 3 are constant. This can make the statement true.

Front 18

Job Search =

Back 18

All jobs require different skills at different levels. This can take time. Its when Job Searching fails it can lead to Discouraged Workers

Front 19

Frictional Unemployment =

Back 19

1. Takes time for people to find new jobs.

2. Result from people always leaving/entering the labor force.

3. People might be waiting and looking for better jobs.

4. This is typically short-term, and not too serious.

Front 20

Sectoral Shifts =

Back 20

Changes in the composition of demand among industries or regions. One industry might be booming in 1 region, which might result in 1 to bust in another.

Front 21

What % of U.S. Manufacturing Jobs are destroyed every year?

Back 21

10%

Front 22

More than ______% of workers typically leave their jobs in a month

Back 22

3%

Front 23

This Government Program helps protect those who just recently become completely unemployed or laid-off.

Back 23

Unemployment Insurance - it typically lasts for 6 months - 1 year and payments are 50% of the person's previous income.

Front 24

Does Unemployment Insurance reduce or increase unemployment?

Back 24

Unemployment Insurance programs INCREASE the unemployment rate because it gives people the incentive to not be as determined to return to employment.

Front 25

The Unemployment Rate is a good way to measure a nation's overall economic well-being: True or False?

Back 25

False - there are simply to many factors that are involved when trying to make a clear conclusion

Front 26

Minimum-Wage Laws

Back 26

Laws passed by our Government that forces firms to increases wages, even if it goes above the ideal equilibrium level for labor supply and labor demand. When minimum-wage laws can cause a surplus of labor.

The raise in wages results in higher quantity of labor supplies and lower quantity of labor demanded.

Front 27

Who do minimum-wage laws matter to most?

Back 27

Typically younger people who are just now entering the labor force, such as teenagers. Most people aren't affected by this because they have experience and get paid well above the minimum wage.

Front 28

What are Unions?

Back 28

Unions are groups of workers who collectively bargain with firms over wages, and working conditions.

Front 29

What is collective bargaining?

Back 29

When a Union negotiates with a firm over work-related matters like wages, working conditions, and benefits.

Front 30

Strike

Back 30

When a Union organizes in a withdrawal in labor form a firm. This leads to productive and profit loss for the firm, thereby pressuring firms to avoid strikes.

Front 31

Wagner Act of 1935

Back 31

Prevents employers from interfering when workers try to organize unions and requires employers to bargain with unions in good faith.

Front 32

The National Labor Relations Board (NLRB) . . .

Back 32

Enforces the Wagner Act of 1935 and more generally speaking, their right to unionize.

Front 33

The positives of a Union

Back 33

1. Greater chance of wages, benefits, and working conditions.

2. Also protect those individuals in remote geographical locations that are dominated by a single firm. These workers would be ruined without the chance to unionize. These areas are called "company towns"

Front 34

The negatives of a Union

Back 34

-Some believe that Unions are inequitable and inefficient. Some believe Unions are just a form of cartel. Their influence over firms can sometimes damage the competitive markets.

Front 35

Theory of Efficiency-Wages

Back 35

A set of theories that states that raising the wages might be better long-term for firms and workers alike.

Front 36

The 4 Efficiency Wage Theories...:

Back 36

1. Worker Health
2. Worker Turnover
3. Worker Quality
4. Worker Effect

Front 37

Worker Health (Efficiency Wage Theory) is. . .

Back 37

When workers have higher wages, it can lead to better nutrition and therefore lead to greater production.

Front 38

Worker Turnover (Efficiency Wage Theory) is . . .

Back 38

The Idea that it is far more cost-efficient for firms to pay the workers they have with higher wages rather they constantly have to re-hire, and pay to train new hires. Even then its not as efficient, because the production levels of new hires vs. seasoned workers are not equal.

Front 39

Worker Quality (Efficiency Wage Theory) is . . .

Back 39

The idea that when using higher wages to attract to workers, the high wages will allow you to narrow down who would be the best addition to a firm.

Front 40

Worker Effort (Efficiency Wage Theory) is . . .

Back 40

The idea that there's a direct link between wages and worker effort. If wages were low, most workers wouldn't work to hard. The opposite could be said when wages are higher. Higher wages encourage workers to not shirk their responsibilities.

Front 41

Structural Unemployment is . . .

Back 41

When a large amount of mis-match occurs between job openings and job skills acquired.
EX: A truck-driver can't do a nurse's job.
-Solution: people need to be re-trained (inefficient but necessary)

Can happen in regions based on growing/declining industries.
-Solution: relocation and training (very costly)

Front 42

Seasonal Unemployment

Back 42

When Unemployment depends on the Season..
Examples:
-Retail workers needed for Holiday Rush
-Lifeguards needed for Summer Time

-Snow Plowers needed for Winter Time

Short-Term because it is just seasonal, but does cause unemployment.

The unemployment reports are adjusted to accommodate this fact.