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Macro 9.pdf

11 Feb 2023
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Macro 9.pdf

  1. Lecture 8 Macroeconomics
  2. Opening Prayer
  3. Quiz Master
  4. Chapter 11 Unemployment
  5. Culture Human Beings Ideas Physical Human Intellectual Financial Inventions Entrepreneurs Free Markets Innovations The Capitals of Innovation
  6. trust health skills knowledge personality relationships Human Capital
  7. Unemployment Inactive Human Capital
  8. Three Types of Unemployment Frictional Seasonal Structural
  9. Frictional Unemployment Time to find a new job
  10. Seasonal Unemployment Demand changes with the season
  11. Structural Unemployment Too many workers Change in Demand
  12. What kind of unemployment is caused by smartphones?
  13. 99% Reduction in Energy 449 watts to 5 watts
  14. Unemployment Rate Labor Force Participation Rate Rate are Ratios
  15. Labor Force Adults 16+ who have jobs or are looking for jobs. Employed + Unemployed
  16. Employed paid employees work in own business unpaid workers in family business full-time and part-time jobs but temporary absence
  17. Unemployed not employed available tried to find a job in the last four weeks waiting to be recalled from layoff
  18. Not in Labor Force not employed full-time student homemaker military retiree discouraged workers
  19. Discouraged Worker
  20. Discouraged Worker People who would like to work but have given up looking for a job in the last four weeks
  21. Who Measures? Department of Labor Bureau of Labor Statistics
  22. Two Surveys The Current Population Survey (CPS) "household survey" Sample of 60,000 households. The Current Employment Statistics Survey (CES): "payroll survey" sample of 160,000 businesses and government agencies that represent 400,000 individual employees.
  23. Labor Force Participation Rate The percent of the Adult Population that is in the Labor Force
  24. Population 330 Adults 254 Labor Force 160 Employed 152 Under 16 76 Not in Labor Force 94 8 Unemployed Employed 152 8 Unemployed Not in Labor Force 94 Under 16 76 Labor Force Participation Rate = Labor Force ÷ Adults Unemployment Rate = Unemployed ÷ Labor Force Rates
  25. 3,000 people live in Pooleynesia. There are 250 people under 16. 450 people are not in the labor force. 230 people are unemployed. 1. What is the Labor Force Participation Rate? 2. What is the Unemployment Rate?
  26. Calculating Unemployment Rates Employed + Unemployed = Labor Force # % 100% The unemployment rate is 10% and there are 4,500 people employed. What is the number unemployed? 10% 90% 4,500 5,000 500 4,500 ÷ .90 = 5,000
  27. Calculating Unemployment Rates Employed + Unemployed = Labor Force # % 100% The unemployment rate is 5% and there are 2,500 people unemployed. What is the number employed? 5% 95% 47,500 50,000 2,500 2,500 ÷ .05 = 50,000
  28. Calculating Unemployment Rates Employed + Unemployed = Labor Force # % 100% The unemployment rate is 3% and there are 19,400 people employed. There are 30,000 adults. What is labor force participation rate? 3% 97% 19,400 20,000 600 19,400 ÷ .97 = 20,000 20,000 ÷ 30,000 = .67 or 67%
  29. Unemployment Who measures it? How is it measured?
  30. 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year 0 N 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year 0 20 40 60 Share of the civilian labor force (%) Hover over chart to Adjust year range data display. Notes: Includes perso civilian noninstitution that are employed or looking for work. Bas persons 16 years of a The comparability of data has been affecte times by methodolog changes in the Curre Survey. Source: 1948-2015 a averages, Current Po Survey, U.S. Bureau Statistics Graph by the Women Men Women
  31. Problems Overstate - Above actual Cash workers Understate - Below actual Discouraged workers
  32. Frédéric Bastiat (1801-1850) There is only one difference between a bad economist and a good one: the bad economist con fi nes himself to the visible effect; the good economist takes into account both the effect than can be seen and those effects than must be foreseen. What is Seen andWhat in Not Seen, 1850
  33. Natural Rate of Unemployment The normal rate of unemployment around which the unemployment rate fluctuates
  34. Cyclical Unemployment The deviation of unemployment from its natural rate
  35. Structural Unemployment Creative Destruction 10% a year
  36. Unemployment Insurance Government program to provide income when workers become unemployed
  37. Unemployment Insurance Unintended Consequence Moral Hazard May prolong unemployment
  38. Minimum Wage Laws Government sets a minimum wage that can legally be paid Price Floor
  39. $0 $5 $10 $15 $20 0 10 20 30 40 50 60 Supply Demand Wage Workers Equilibrium Wage 30 workers 30 jobs no unemployment Minimum Wage 40 workers 20 jobs 20 unemployed workers Minimum Wage 20 workers get a raise 10 workers lose job 10 new unemployed workers Minimum Wage
  40. Labor Union Worker association that negotiates with employers over wages, benefits, and conditions
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