Eco 202 ch 29 unemployment

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Eco 202 ch 29 unemployment

  1. 1. Chapter 29Unemployment
  2. 2. Key Termslabor force structural unemploymentunemployment rate job searchlabor-force participation rate unemployment insurancenatural rate of unemployment unioncyclical unemployment collective bargainingdiscouraged workers strikefrictional unemployment efficiency wages
  3. 3. UnemploymentHow is it measured? Who measures it?Central Department of Statistics and Information www.cdsi.gov.sa
  4. 4. Unemployment Employed UnemployedNot in the Labor Force
  5. 5. Employed paid employees work in own businessunpaid workers in family business full-time and part-time jobs but temporary absence
  6. 6. Unemployed not employed availabletried to find a job in the last four weekswaiting to be recalled from layoff
  7. 7. Not in Labor Forcenot employed or unemployed full-time student homemaker retiree
  8. 8. Not in Labor Forcenot employed or unemployed full-time student homemaker retiree
  9. 9. Labor Force Employed andUnemployed
  10. 10. Unemployment RateThe percentage of the labor force that is unemployed
  11. 11. Unemployment RateEmployed 140Unemployed 22Labor Force 162Unemployment Rate 13.6%
  12. 12. Labor-Force Participation RateThe percentage of theadult population that is in the labor force
  13. 13. Labor-Force Participation RateLabor Force 162Adult Population 325Participation Rate 49.8%
  14. 14. RatesEmployed 140Unemployed 22Labor Force 162Unemployment Rate 13.6%Adult Population 325Participation Rate 49.8%
  15. 15. Natural Rate of Unemployment The normal rate of unemployment aroundwhich the unemployment rate fluctuates
  16. 16. Cyclical Unemployment The deviation ofunemployment from its natural rate
  17. 17. Discouraged WorkersPeople who would liketo work but have given up looking for a job
  18. 18. ProblemsOverstate - Above actual Cash workersUnderstate - Below actual Discouraged workers
  19. 19. Unemployment Frictional Seasonal Structural
  20. 20. FrictionalTime to find a new job
  21. 21. SeasonalDemand changes with the season
  22. 22. Structural Too many workersChange in demand for skills
  23. 23. StructuralCreative Destruction 10% a Year
  24. 24. Unemployment InsuranceGovernment program to provide income when workers become unemployed
  25. 25. Unemployment InsuranceUnintended Consequence Moral HazardMay prolong unemployment
  26. 26. Why are wages too high?Minimum wage laws Unions Efficiency Wages
  27. 27. Minimum Wage Laws Government sets aminimum wage that can legally be paid
  28. 28. Wage Minimum Wage Minimum Wage 40 workers 20 workers 4,000 20 jobs get a raise 20 unemployed 10 workers Supply lose job workers 3,000 Minimum 10 new unemployed Wage workers 2,000 Equilibrium Wage 1,000 30 workers 30 jobs no Demand unemployment 0 0 10 20 30 40 50 60 Workers
  29. 29. UnionWorker association that negotiates withemployers over wages,benefits, and conditions
  30. 30. Union One contract for all employees StrikeConflicts between workers
  31. 31. Efficiency WagesHigher wages make more productive employees
  32. 32. Efficiency WagesEmployee Wage Pizzas Productivity Wage per Pizza Ali 100 5 20.0Abdullah 200 12 16.7
  33. 33. Efficiency Wages More HealthyLower TurnoverHigher Quality More Effort

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