Ch. 8 M. Burrow - Lecture notes Chapter 8 PDF

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ECON 2010, Fall 2019...

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Chapter 8 Assignment

Use the following to answer questions 1-6. Population and labor force: Year 1 Population Labor force # employed

200 million 85 million 40 million

Year 8 230 million 110 million 78 million

1) What is the number of unemployed in year 1? 45 million 2) What is the number of unemployed in year 8? 32 million 3) What is the unemployment rate in year 1? 52.94% 4) What is the unemployment rate in year 8? 29.09% 5) What is the labor force participation rate in year 1? 47.06% 6) What is the labor force participation rate in year 8? 70.91%

Answer the following questions from the Openstax textbook. Save and submit as a pdf or word document in Blackboard. 1. Assess whether the following would be counted as “unemployed” in the Current Employment Statistics survey. a. A husband willingly stays home with children while his wife works. No b. A manufacturing worker whose factory just closed down. Yes c. A college student doing an unpaid summer internship. No d. A retiree. No e. Someone who has been out of work for two years but keeps looking for a job. Yes f. Someone who has been out of work for two months but isn’t looking for a job. No g. Someone who hates her present job and is actively looking for another one. No h. Someone who decides to take a part time job because she could not find a full-time position. No

2. What is structural unemployment? Give examples of structural unemployment. Individuals who are unemployed because they lack skills that the labor market values are categorized at structurally unemployed. Some examples include people who never finished high school and philosophy majors because there is a shortage of jobs in this career field. 3. Using the definition of the unemployment rate, is an increase in the unemployment rate necessarily a bad thing for a nation? This is not necessarily negative. There could be an increase in individuals actively searching for work, and they would count as unemployed. 4. While unemployment is highly negatively correlated with the level of economic activity, in the real world it responds with a lag. In other words, firms do not immediately lay off workers in response to a sales decline. They wait a while before responding. Similarly, firms do not immediately hire workers when sales pick up. What do you think accounts for the lag in response time? A lag exists in these situations because the firms wait until there is a continuous decline or incline in economic activity before they lay off or hire workers. Furthermore, some contracts would prevent them from immediately firing current employees. 5. Why do you think that unemployment rates are lower for individuals with more education? Typically, education correlates with the likelihood that an individual will get a job. Furthermore, many jobs require or prefer employees with a higher level of education. 6. Is it desirable to pursue a goal of zero unemployment? Why or why not? No, having zero unemployment is not good for an economy because this means that there is no more room for people to enter or reenter the workforce. Furthermore, this would limit the growth of businesses and therefore the economy. 7. What type of unemployment (cyclical, frictional, or structural) applies to each of the following: a. landscapers laid off in response to drop in new housing construction during a recession. Cyclical b. coal miners laid off due to EPA regulations that shut down coal fired power Structural c. a financial analyst who quits his/her job in Chicago and is pursing similar work in Arizona Frictional d. printers laid off due to drop in demand for printed catalogues and flyers as firms go the internet to promote an advertise their products. Structural e. factory workers in the U.S. laid off as the plants shut down and move to Mexico and Ireland. Structural...