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Exploring Labor Markets and Unemployment
Jul 31, 2024
Chapter 9: Labor Market and Macroeconomics
Key Topics
Unemployment Rate
: Definition and importance in macroeconomics.
Models
: How firms set prices and wages, and their impact on employment and wages.
Government Policy
: Potential improvements through policy.
Labor Unions
: Differences in role between countries.
Unemployment
Definition
: People willing to work but can't find jobs at the going rate.
Inefficiency
: Unemployment represents inefficiency in the economy.
Government Role
: Policies affecting wage growth and unemployment.
Population and Labor Force
Population Categories
:
Total population.
Working-age population (excluding children and possibly retirees).
Labor force (those seeking work).
Out of the labor force (retired, parents, students).
Labor Force Subdivisions
:
Employed
Unemployed (actively seeking work)
Labor Market Statistics
Participation Rate
: Labor force / working-age population.
Unemployment Rate
: Unemployed / labor force (unemployed + employed).
Employment Rate
: Employed / working-age population.
Country Comparisons
Nordic vs. Southern European Countries
: Nordic countries have better institutions, lower unemployment rates, and higher employment rates.
U.S. Specifics
Non-institutional Population
: Over 16, not in prison, military, etc.
Labor Force
: Employed + unemployed.
Employed
: Working for pay.
Unemployed
: Not working, want to work, and have looked for work in the past four weeks.
Survey Based
: Data collected via household surveys.
Trends and Observations
Great Recession Impact
: Increase in unemployed during 2008-2009, subsequent recovery.
Labor Force Participation Rate
: Declined since 2000.
Reasons
: Aging population, slower labor market recovery.
Economic Impact
: Decline represents a significant number of people; reasons for decline are debated.
Gender Trends
: Participation rate increased from 1960s as women entered the labor force, peaked around 2000, and has been falling since.
Economic Questions
: Whether participation rate decline is good or bad depends on context (e.g., voluntary absence from workforce vs. discouragement).
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