This document summarizes key topics from a chapter on labor markets, including:
1) It describes the U.S. labor market trends of rising wages, employment-population ratios, and unemployment rates over time.
2) It explains the basic supply and demand model of the labor market and how taxes, regulations, and wage rigidities can create distortions.
3) It discusses different types of unemployment and the "bathtub model" for how employment and unemployment levels change over time.
4) It provides an overview of international labor market comparisons and differences between the U.S., Europe, and Japan.
5) It covers concepts of valuing human capital using present discounted values and explains the rising return
The Theory of Consumer Choice - Budget Line & ConstraintFaHaD .H. NooR
Do all demand curves slope downward?
How do wages affect labour supply?
How do interest rates affect household saving?
Do the poor prefer to receive cash or in-kind transfers?
Economics #UCP STUDY MATERIAL
The Theory of Consumer Choice - Budget Line & ConstraintFaHaD .H. NooR
Do all demand curves slope downward?
How do wages affect labour supply?
How do interest rates affect household saving?
Do the poor prefer to receive cash or in-kind transfers?
Economics #UCP STUDY MATERIAL
Consumer and Producer Surplus content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Consumer Surplus
Producer Surplus
Consumer & Producer Surplus in one diagram
Consumer and Producer Surplus content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics:
Consumer Surplus
Producer Surplus
Consumer & Producer Surplus in one diagram
Proofed Paper ntp192135 - Mon Feb 27 202029 EST 2017.docxhallettfaustina
Proofed Paper: ntp192135 - Mon Feb 27 20:20:29 EST 2017
Paper Title: ECON 102 essay
No. of Pages: 2page
Paper Style: Chicago Paper Type: Other
Taken English? Yes English as Second Language? Yes
Feedback Areas: Topic Development
Paper Goals: econ essay
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Ideas are well organized. Transition sentences effectively connect one idea to the next. The essay is free of typos and
grammatical errors.
Application of Economic Analysis: Needs Improvement
The definition of the term full employment is incorrect.
The student draws the wrong conclusion from her comparison of the actual and natural rates of unemployment.
The student identifies the reasons for the changes in the natural rate of unemployment from 2007 to 2012
incompletely or incorrectly.
The student does not report the source of the data on the natural and actual rate of unemployment.
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Proofed Paper: ntp192135 - Mon Feb 27 20:20:29 EST 2017
Whether or not full
employment has been
reached is based on the
relationship between
actual and natural unemployment.
Consider reexamining these
definitions of natural and
actual unemployment.
Further, examine the
statistics regarding their
current state.
Is the issue that they are
unwilling to work or that they
are unqualified for the jobs
that are available even if they
did want them?
page 2 / 4
Proofed Paper: ntp192135 - Mon Feb 27 20:20:29 EST 2017
If the fixed rate were a very
high one, would it matter
that it was fixed? Why
might an employer be
unwilling to hire a qualified
and willing worker?
From where did these stats
come? What do they have to
say about the economy's
proximity to full employment?
page 3 / 4
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Writing Assignment #2: The Natural Rate of Unemployment
1. (2 paragraphs) Has the U.S. economy achieved approximate full employment yet? Explain
how we define ‘full employment’ and how you can tell whether or not that goal has been
achieved. Use appropriate data to support your answer (see below). Be sure to cite the sources of
your data in your essay.
Use the Federal Reserve Bank of St. Louis’ estimate of the Natural Rate of
Unemployment (short-term) at http://research.stlouisfed.org/fred2/ser ...
Week 2 - Discussion Forum 2Guided Response Respond to at leasnicolleszkyj
Week 2 - Discussion Forum 2
Guided Response: Respond to at least two of your fellow students’ and to your instructor’s posts in a substantive manner and provide information or concepts that they may not have considered. Each response should have a minimum of 100 words. Support your position by using information from the week’s readings. You are encouraged to post your required replies earlier in the week to promote more meaningful and interactive discourse in this discussion forum.
On this Document there two classmates with discussion that needs to be response. Jason Stack and Ashley Thiberville
Jason Stack
Unemployment
The term unemployment is often a word that make a person uneasy, especially in today's COVID-19 effected economy. However, we don't often think about what this percentage incorporates. According to Gwartney et al. (2019), the unemployment rate is the percentage of people of the civilian workforce above the age of 16 that do not have a job, are available for work, and have been actively seeking employment within the past four weeks (pg. 8-2). Additionally, this doesn't include those who are not actively seeking employment such as students, household workers, disabled, retirees, or those that stopped looking for employment. Understanding what is included and excluded in the calculation of the unemployment rate, we can why the unemployment rate is such an important metric for the U.S. economy.
The unemployment rate is one of the critical metrics economists used to measure the health of the economy. Gwartney et al. (2019), suggest that employment and output are closely linked, and their relationship point toward the location of where a nation is in its business cycle. The business cycle is a reflection of a nation's economic growths and slowdowns over time, which reflects the real output (Gwartny et al., 2019, pg. 8-1a). Therefore, the relationship between actual output and unemployment can reflect the position in the cycle. For example, figure 1 shows the unemployment rate of the United States for 2019. The unemployment rate is trending downward, indicating a higher percentage of the civilian workforce is employed, the output is increasing, and economic growth is rising. Respectively, if the opposite were to occur over the next few months due to the COVID-19, unemployment would increase, output would reduce, and the economy would be leading into a slowdown period.
Figure 1 https://www.ncsl.org/research/labor-and-employment/national-employment-monthly-update.aspx (Links to an external site.)
With such a heavy reliance on the unemployment rate percentage, there seems to be some question as to its accuracy. Buss (1986) suggests that the U.S. Bureau of Labor Statistics (BLS) uses secondary or administrative data sources, such as tax records and employer surveys, a process requiring a great deal of estimation, adjustment, and inference to calculate the unemployment rate (pg. 241). An alternative method of ...
Are the Long-Term Unemployed on the Margins of the Labor Market?Luis Taveras EMBA, MS
The hypothesis we seek to test is that the longer workers are
unemployed the less they become tied to the job market, either because, on the supply side, they
grow discouraged and search for a job less intensively (e.g., Krueger and Mueller, 2011) or
because, on the demand side, employers discriminate against the long-term unemployed, based
on the (rational or irrational) expectation that there is a productivity-related reason that accounts
for their long jobless spell (e.g., Kroft, Lange and Notowidigdo, 2013 and Ghayad, 2013).
Causes and Impacts of Unemployment content slideshow. Designed for the Economic A level qualification. Can be used in revision and in class.
Subtopics
Causes of Unemployment
Costs of Unemployment
Chapter 1 57.What is the difference between recession and de.docxsleeperharwell
Chapter 1
57.
What is the difference between recession and depression in an economy? Provide an example of depression from the real world that has hit the global economy.
Use the following to answer question 58:
Answer: When there is a mild fall in the gross domestic product (GDP) of an economy over a period of time it leads to recession in the economy. If the intensity of the fall in GDP is severe over a period of time, then it turns into a depression. Recession is cyclic in nature; that is, it repeats itself over a period of time in an economy. A famous example of depression is that of the Great Depression of the 1930s that occurred in the United States and affected the global economy. Even the financial crisis of 2008-2009 in the United States was very much reminiscent of the Great Depression.
58.
Refer to the following graph and identify the years for which Country A and Country B experienced recession.
Country A experienced its recession during 2003 and its early recovery during 2004. Country B experienced its first recession during 2002 and its early recovery in 2003. Country B experienced a second recession in 2007.
59.
Why do we call macroeconomics an imperfect science? Explain.
The study of macroeconomics depends mainly upon the historical data on different economies. Macroeconomists analyze these data to explain changes occurring in different economic parameters (income, prices, unemployment, etc.) and formulate policies. Additionally, macroeconomic studies cannot be conducted in controlled experiments, as in biology or chemistry, for example. In this way, macroeconomists are similar to weather forecasters.
60.
Are the terms “market clearing” and “equilibrium” one and the same? Explain.
Yes, both terms represent the same notion: the balance between supply and demand. It is the balancing point at which everything that is produced gets sold and fulfills the entire demand. Thus, if all other things remain constant, then there is no tendency to change the quantity supplied and demanded at this point.
61.
Do you agree with the statement, “macroeconomics rests on the foundation of microeconomics”? Explain.
Macroeconomics involves studying the aggregate of economic variables related to individual decision making parameters, which are microeconomic (think of individuals' expenses, investments, etc.). That is to say, the total expenditure in an economy is the aggregate (sum) of all the expenditures done by all consumers in that economy, or the total investment done in an economy is the aggregate (sum) of all individual investments done by firms in that economy. This reflects that macroeconomic study rests on the foundation of microeconomics.
62.
Give two examples of macroeconomic variables and microeconomic variables.
The income of your father is a microeconomic variable, while the gross domestic product (GDP) of your country is a macroeconomic variable. The money your father saves in the bank is a microeconomic va.
Introducing market and political power interactions into a SOE RBC model - di...ADEMU_Project
Discussion of the paper 'An RBC Model with Market and Political Power Interactions' by Tryphon Kollintzas (Athens University of Economics and Business, CEPR)
We study the impact of trade shocks on inequality using newly constructed micro and macro data. First, we use the Current Population Survey’s (CPS) Merged Outgoing Rotation Group (MORG) from 1979 to 2010 combined with new annual measures of imported inputs, a proxy for offshoring. We find that in periods when US relative prices are high, and imports surge relative to exports, workers in sectors with greater initial exposure to international trade were more likely to be unemployed a year later, but did not experience significant declines in wages conditional on being employed. Contrary to the usual narrative, we find stronger wage effects for higher-wage workers, particularly for those who are less-educated. Second, sectors most exposed to trade shocks do not experience relative increases in inequality. Third, using aggregate international data data on the top 1% share of income as an inequality proxy for 30 countries, we find that various trade shocks, such as increases in trade with China, are not generally correlated with inequality. Instead, using new historical data on top marginal tax rates, we confirm a close correlation between top rates and top income shares, and find that the level of top marginal tax rates impacts changes in the top 1% share of income, implying that top income shares are a function of historical marginal tax rates.
Read more: https://www.hhs.se/site
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Read| The latest issue of The Challenger is here! We are thrilled to announce that our school paper has qualified for the NATIONAL SCHOOLS PRESS CONFERENCE (NSPC) 2024. Thank you for your unwavering support and trust. Dive into the stories that made us stand out!
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
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A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
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Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
How to Make a Field invisible in Odoo 17Celine George
It is possible to hide or invisible some fields in odoo. Commonly using “invisible” attribute in the field definition to invisible the fields. This slide will show how to make a field invisible in odoo 17.
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
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1. Chapter 7: Labor Market
Ryan W. Herzog
Spring 2021
Ryan W. Herzog (GU) Labor Spring 2021 1 / 39
2. 1 Introduction
2 The U.S. Labor Market
3 Supply and Demand
4 The Bathtub Model of Unemployment
5 Labor Markets around the World
6 How Much is Your Human Capital Worth
7 The Rising Return to Education
Ryan W. Herzog (GU) Labor Spring 2021 2 / 39
3. Introduction
Learning Objectives
How a basic supply-and-demand model helps us understand the labor
market.
How labor market distortions like taxes and rising costs affect
employment in the long run.
How to compute present discounted values
How to value your human capital.
Why the return to a college education has risen enormously over the
last half-century.
Ryan W. Herzog (GU) Labor Spring 2021 3 / 39
4. U.S.
Wages account for two-thirds of per capita GDP.
Average wages have grown at 2 percent per year for the last century.
Ryan W. Herzog (GU) Labor Spring 2021 4 / 39
5. U.S.
The employment-population ratio is the fraction of the civilian
population over the age of 16 that is working
This ratio:
Has been increasing over time in large part due to the entry of women
into the workforce.
Decreases in times of a recession.
Ryan W. Herzog (GU) Labor Spring 2021 5 / 39
7. U.S.
The unemployment rate is the fraction of the labor force that is
unemployed
A person is unemployed if the following conditions hold:
S/he does not have a job that pays a wage or salary.
S/he actively looked for a job during the four weeks before measuring
the unemployment rate.
S/he is available to work.
Ryan W. Herzog (GU) Labor Spring 2021 7 / 39
9. U.S.
Dynamics of the Labor Market
Job creation and job destruction in the United States
Occur each month
Are part of normal changes in the economy
For most people, periods of unemployment are relatively short.
People who are unemployed for long periods account for most of the
total weeks of lost work.
Many countries have developed social safety nets.
Ryan W. Herzog (GU) Labor Spring 2021 9 / 39
10. Supply and Demand
The labor demand curve slopes downward because of diminishing
marginal product of labor (MPL).
The labor supply curve slopes upward because the price of leisure is
higher when wages are higher.
The intersection of labor supply and demand determines the level of
employment and the wage rate.
Ryan W. Herzog (GU) Labor Spring 2021 10 / 39
12. Supply and Demand
A Change in Labor Supply
If the government collects a tax on a worker’s wage:
The labor supply curve shifts left.
A worker receives less money and supplies less laborÑthis applies to any
wage.
In order to be in equilibrium, firms must raise wages.
Ryan W. Herzog (GU) Labor Spring 2021 12 / 39
13. Supply and Demand
An Increase in the Tax Rate
Ryan W. Herzog (GU) Labor Spring 2021 13 / 39
14. Supply and Demand
A Change in Labor Demand
Suppose the government creates regulations making it harder to fire
workers.
Firms will demand fewer workers.
Labor demand shifts left, causing wages and employment to fall.
The unemployment rate rises initially and recovers as discouraged
workers drop out of the labor force.
Ryan W. Herzog (GU) Labor Spring 2021 14 / 39
15. Supply and Demand
A Reduction in Labor Demand
Ryan W. Herzog (GU) Labor Spring 2021 15 / 39
16. Supply and Demand
Wage Rigidity
Wage rigidity
Wages fail to adjust after a shock to labor demand or supply.
What happens if wages do not fall in the above demand shock
example?
The labor market will not clear and this results in a larger fall in
employment.
Ryan W. Herzog (GU) Labor Spring 2021 16 / 39
17. Supply and Demand
A Reduction in Labor Demand with Wage Rigidity
Ryan W. Herzog (GU) Labor Spring 2021 17 / 39
18. Supply and Demand
US Labor Market
Increase in the employment-population ratio
Due in large part to increases in the number of women working
Supply shocks
Changes in social norms
Changes in technology for managing fertility
Demand shocks
Reduced discrimination against women
Ryan W. Herzog (GU) Labor Spring 2021 18 / 39
19. Supply and Demand
Unemployment over time
Historically:
Rising unemployment in the 1960s and 1970s
Decline in unemployment in the 1980s
Possibly explained by the baby boom
Ryan W. Herzog (GU) Labor Spring 2021 19 / 39
20. Supply and Demand
Different Kinds of Unemployment
The natural rate of unemployment is the rate that would prevail if the
economy were in neither a boom nor a bust
Cyclical unemployment is the difference between the actual rate and
the natural rate and is associated with short-run fluctuations in output
Ryan W. Herzog (GU) Labor Spring 2021 20 / 39
21. Supply and Demand
Natural Rate
The natural rate of unemployment includes two components:
Frictional unemployment: workers being between jobs in the dynamic
economy
Structural unemployment: labor market failing to match up workers
and firms in the market
Actual unemployment is the sum of frictional, structural, and cyclical
unemployment.
actual unemployment = friction + structural
| {z }
natural
+cyclical (1)
Ryan W. Herzog (GU) Labor Spring 2021 21 / 39
22. Bathtub
Bathtub Model of Unemployment
Two endogenous variables: employment E and unemployment U
Model states how employment and unemployment evolve over time
Analogy: water entering and draining a bath tub at the same rate
Et + Ut = L (2)
∆Ut+1 = sEt − f Ut (3)
where sEt measures employed people who lose their jobs and f Ut
measures unemployed people who find new jobs.
Ryan W. Herzog (GU) Labor Spring 2021 22 / 39
23. Bathtub
Bathtub Model of Unemployment
u∗
≡
U∗
L
=
s
f + s
(4)
Ryan W. Herzog (GU) Labor Spring 2021 23 / 39
24. Bathtub
Key Insights
Only way to alter the natural rate of unemployment is:
change the job finding rate.
change the job separation rate.
Policies along these lines can have unintended consequences.
Ryan W. Herzog (GU) Labor Spring 2021 24 / 39
25. World
International Labour Markets
Some facts about international labor markets since 1980:
Unemployment in Europe is substantially above America’s rate
Unemployment in Japan is historically below the United States.
Ryan W. Herzog (GU) Labor Spring 2021 25 / 39
26. World
Europe
European unemployment has increased dramatically because of:
Adverse shocks and high oil prices.
Inefficient labor market institutions in the form of higher
unemployment and welfare benefits.
1990s hours worked in Europe much lower than 1970s levels.
Ryan W. Herzog (GU) Labor Spring 2021 26 / 39
28. World
GDP per capita is lower in Europe. Why?
People work less hours.
If working less is voluntary:
Europeans enjoy leisure more and welfare is likely improved.
If working less is a result of distortions in the labor market:
This outcome is likely not welfare enhancing.
Ryan W. Herzog (GU) Labor Spring 2021 28 / 39
30. Human Capital
Present Discount Value
Present discounted value is:
The value of money you would need to put in the bank today to equal
a given future value.
Tells how much a future payment or a future flow of payments is worth
today.
present discounted value =
future value
(1 + interest rate)T
Ryan W. Herzog (GU) Labor Spring 2021 30 / 39
31. Human Capital
Over a Period of time
To calculate the value of a stream of equal payments over a given
number of years:
Arrange the sum of each period’s present discounted values into a
geometric series.
Use the formula for a sum of a geometric series to calculate the
present discounted value of the stream of payments.
If a is some number between 0 and 1, then calculating a geometric
series is:
1 + a + a2
+ · + an
=
1 − an+1
1 − a
Ryan W. Herzog (GU) Labor Spring 2021 31 / 39
32. Education
College Wage Premium
The premium to having a college degree:
Has been rising rapidly over the last forty years.
Far outweighs the forgone wages and tuition costs of going to college.
Ryan W. Herzog (GU) Labor Spring 2021 32 / 39
34. Education
College Wage Premium
As wages have grown, so has the supply of college graduatesÑan
increase in supply should cause wages to fall. Why hasn’t this
happened?
The demand for college-educated workers has increased by an amount
large enough to offset supply.
Ryan W. Herzog (GU) Labor Spring 2021 34 / 39
36. Education
College Wage Premium
Explanations for a large shift in demand for highly educated workers
include:
Skill-biased technical change: new technologies are more effective at
improving productivity of college-educated workers.
Globalization: increased opening of trade.
Ryan W. Herzog (GU) Labor Spring 2021 36 / 39
37. Education
Inequality
Rising college premium is one cause of rising income inequality
Early 1900s most inequality associated with capital income
Recently most inequality associated with salaries and business income
Ryan W. Herzog (GU) Labor Spring 2021 37 / 39