宏观经济学原理-第五版-英文原版课件macro-ch15-presentation

UnemploymentMacroeonomicsPRINCIPLESOFN.GregoryMankiwPremiumPowerPointSlides

byRonCronovich15UnemploymentMacroeonomicsPRIInthischapter,

lookfortheanswerstothesequestions:Howisunemploymentmeasured?Whatisthe“naturalrateofunemployment”?Whyaretherealwayssomepeopleunemployed?Howisunemploymentaffectedbyunionsandminimumwagelaws?Whatisthetheoryofefficiencywages,andhowdoesithelpexplainunemployment?11UNEMPLOYMENTInthischapter,

lookfortheLaborForceStatisticsProducedbyBureauofLaborStatistics(BLS),

intheU.S.Dept.ofLaborBasedonregularsurveyof60,000householdsBasedon“adultpopulation”(16yrsorolder)02UNEMPLOYMENTLaborForceStatisticsProducedLaborForceStatisticsBLSdividespopulationinto3groups:Employed:paidemployees,self-employed,

andunpaidworkersinafamilybusinessUnemployed:peoplenotworkingwhohavelookedforworkduringprevious4weeksNotinthelaborforce:everyoneelseThelaborforceisthetotal#ofworkers,includingtheemployedandunemployed.03UNEMPLOYMENTLaborForceStatisticsBLSdivilaborforceparticipationratelaborforceadultpopulation=100xLaborForceStatisticsLaborforceparticipationrate:

%oftheadultpopulationthatisinthelaborforceUnemploymentrate(“u-rate”):

%ofthelaborforcethatisunemployedu-rate#ofunemployedlaborforce=100x04UNEMPLOYMENTlaborforceparticipationrateACTIVELEARNING1

Calculatelaborforcestatistics5Computethelaborforce,u-rate,adultpopulation,andlaborforceparticipationrateusingthisdata:AdultpopulationoftheU.S.

bygroup,June2008#ofemployed 145.9million#ofunemployed 8.5millionnotinlaborforce 79.2million5UNEMPLOYMENTACTIVELEARNINGLaborforce =employed+unemployed

=145.9+8.5

=154.4millionU-rate =100x(unemployed)/(laborforce)

=100x8.5/154.4

=5.5%ACTIVELEARNING1

Answers66UNEMPLOYMENTLaborforce =employed+unePopulation =laborforce+notinlaborforce

=154.4+79.2

=233.6LFpartic.rate =100x(laborforce)/(population)

=100x154.4/233.6

=66.1%ACTIVELEARNING1

Answers77UNEMPLOYMENTPopulation =laborforce+nLaborMarketStatisticsforDifferentGroupsTheBLSpublishesthesestatisticsfordemographicgroupswithinthepopulation.Thesedatarevealwidelydifferentlabormarketexperiencesfordifferentgroups.08UNEMPLOYMENTLaborMarketStatisticsforDiLaborMarketStatisticsforWhites&Blacks,

June2008Adults(20yrs&older)u-rateLFpart.rateWhite,male4.5%76.1%White,female4.260.4Black,male9.371.5Black,female7.464.309UNEMPLOYMENTLaborMarketStatisticsforWhLaborMarketStatisticsforWhites&Blacks,

June2008Teens(16-19yrs)u-rateLFpart.rateWhite16.643.9Black29.627.9010UNEMPLOYMENTLaborMarketStatisticsforWhLaborMarketStatisticsforOtherGroups,

June2008Allagesu-rateLFpart.rateAsian4.567.4Hispanic7.769.0011UNEMPLOYMENTLaborMarketStatisticsforOtLaborMarketStatisticsbyEducationLevel,

June2008Adults(25yrs&older)u-rateLFpart.ratelessthanh.s.8.7%45.9%h.s.diploma5.162.8somecollegeorassocdegree4.271.9bachelor’sdegreeormore2.378.1012UNEMPLOYMENTLaborMarketStatisticsbyEduLFParticipationRatesbySex,1950-2007MenWomen013UNEMPLOYMENTLFParticipationRatesbySex,ACTIVELEARNING2

Limitationsoftheu-rate14Ineachofthefollowing,whathappenstotheu-rate?Doestheu-rategiveanaccurateimpressionofwhat’shappeninginthelabormarket?A. Suelostherjobandbeginslookingforanewone.B. Jon,asteelworkerwhohasbeenoutofworksincehismillclosedlastyear,becomesdiscouragedandgivesuplookingforwork.C. Sam,thesoleearnerinhisfamilyof5,justlosthis$80,000jobasaresearchscientist.Immediately,hetakesapart-timejobatMcDonald’suntilhecanfindanotherjobinhisfield.14UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers15A. Suelostherjobandbeginslookingforanewone.u-raterisesArisingu-rategivestheimpressionthatthelabormarketisworsening,anditis.15UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers16B. Jonhasbeenoutofworksincelastyear,

becomesdiscouraged,stopslookingforwork.Discouragedworkers

wouldliketoworkbuthavegivenuplookingforjobsclassifiedas“notinthelaborforce”ratherthan“unemployed”U-ratefallsbecauseJonisnolongercountedasunemployed.Afallingu-rategivestheimpressionthatthelabormarketisimproving,butitisnot.16UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers17C. Samlosthis$80,000job,andtakesapart-timejobatMcDonald’suntilhefindsabetterone.U-rateunchangedbecauseapersonis“employed”whethertheyworkfullorparttime.Thingsareworse,buttheu-ratefailstoshowit.17UNEMPLOYMENTACTIVELEARNINGWhatDoestheU-RateReallyMeasure?Theu-rateisnotaperfectindicatorofjoblessnessorthehealthofthelabormarket:Itexcludesdiscouragedworkers.Itdoesnotdistinguishbetweenfull-timeand

part-timework,orpeopleworkingparttimebecausefull-timejobsnotavailable.SomepeoplemisreporttheirworkstatusintheBLSsurvey.Despitetheseissues,theu-rateisstillaveryusefulbarometerofthelabormarket&economy.018UNEMPLOYMENTWhatDoestheU-RateReallyMeTheDurationofUnemploymentMostspellsofunemploymentareshort:Typically1/3oftheunemployed

havebeenunemployedunder5weeks,

2/3havebeenunemployedunder14weeks.Only20%havebeenunemployedover6months.Yet,mostobservedunemploymentislongterm.Thesmallgroupoflong-termunemployedpersonshasfairlylittleturnover,soitaccountsformostoftheunemploymentobservedovertime.Knowingthesefactshelpspolicymakersdesignbetterpoliciestohelptheunemployed.019UNEMPLOYMENTTheDurationofUnemploymentMoCyclicalUnemploymentvs.theNaturalRateThere’salwayssomeunemployment,thoughtheu-ratefluctuatesfromyeartoyear.NaturalrateofunemploymentthenormalrateofunemploymentaroundwhichtheactualunemploymentratefluctuatesCyclicalunemploymentthedeviationofunemploymentfromits

naturalrateassociatedwithbusinesscycles,

whichwe’llstudyinlaterchapters020UNEMPLOYMENTCyclicalUnemploymentvs.the0246810121960196519701975198019851990199520002005U.S.Unemployment,1960-2007NaturalrateofunemploymentUnemploymentrate0percentageoflaborforce21UNEMPLOYMENT024681012196019651970197519801ExplainingtheNaturalRate:AnOverviewEvenwhentheeconomyisdoingwell,thereisalwayssomeunemployment,including:Frictionalunemploymentoccurswhenworkersspendtimesearchingforthejobsthatbestsuittheirskillsandtastesshort-termformostworkersStructuralunemploymentoccurswhentherearefewerjobsthanworkersusuallylonger-term022UNEMPLOYMENTExplainingtheNaturalRate:JobSearchWorkershavedifferenttastes&skills,and

jobshavedifferentrequirements.Jobsearchistheprocessofmatchingworkers

withappropriatejobs.Sectoralshiftsarechangesinthecompositionofdemandacrossindustriesorregionsofthecountry.Suchshiftsdisplacesomeworkers,

whomustsearchfornewjobsappropriate

fortheirskills&tastes.Theeconomyisalwayschanging,

sosomefrictionalunemploymentisinevitable.023UNEMPLOYMENTJobSearchWorkershavedifferePublicPolicyandJobSearchGovtemploymentagencies

provideinformationaboutjobvacanciestospeedupthematchingofworkerswithjobs.Publictrainingprograms

aimtoequipworkersdisplacedfromdecliningindustrieswiththeskillsneededingrowingindustries.024UNEMPLOYMENTPublicPolicyandJobSearchGoUnemploymentInsuranceUnemploymentinsurance(UI):

agovtprogramthatpartiallyprotectsworkers’incomeswhentheybecomeunemployedUIincreasesfrictionalunemployment.

Toseewhy,recalloneofthe

TenPrinciplesofEconomics:

Peoplerespondtoincentives.

UIbenefitsendwhenaworkertakesajob,

soworkershavelessincentivetosearchor

takejobswhileeligibletoreceivebenefits.025UNEMPLOYMENTUnemploymentInsuranceUnemployUnemploymentInsuranceBenefitsofUI:ReducesuncertaintyoverincomesGivestheunemployedmoretimetosearch,resultinginbetterjobmatchesandthushigherproductivity026UNEMPLOYMENTUnemploymentInsuranceBenefitsExplainingStructuralUnemploymentStructuralunemployment

occurswhennotenoughjobsto

goaround.WLDSWEactualwageW1unemp-loymentOccurswhenwage

iskeptaboveeq’m.Therearethreereasonsforthis…027UNEMPLOYMENTExplainingStructuralUnemploy1.Minimum-WageLawsThemin.wagemayexceedtheeq’mwage

fortheleastskilledorexperiencedworkers,causingstructuralunemployment.Butthisgroupisasmallpartofthelaborforce,sothemin.wagecan’texplainmostunemployment.028UNEMPLOYMENT1.Minimum-WageLawsThemin.2.UnionsUnion:aworkerassociationthatbargainswithemployersoverwages,benefits,andworkingconditionsUnionsexerttheirmarketpowertonegotiatehigherwagesforworkers.Thetypicalunionworkerearns20%higherwagesandgetsmorebenefitsthananonunionworkerforthesametypeofwork.029UNEMPLOYMENT2.UnionsUnion:aworkerass2.UnionsWhenunionsraisethewageaboveeq’m,

quantityoflabordemandedfallsandunemploymentresults.“Insiders”–workerswhoremainemployed,

theyarebetteroff“Outsiders”–workerswholosetheirjobs,

theyareworseoffSomeoutsidersgotonon-unionizedlabormarkets,whichincreaseslaborsupplyandreduceswagesinthosemarkets.030UNEMPLOYMENT2.UnionsWhenunionsraiseth2.UnionsAreunionsgoodorbad?Economistsdisagree.Critics:

Unionsarecartels.Theyraisewagesaboveeq’m,whichcausesunemploymentand/ordepresseswagesinnon-unionlabormarkets.Advocates:

Unionscounterthemarketpoweroflargefirms,makefirmsmoreresponsivetoworkers’concerns.031UNEMPLOYMENT2.UnionsAreunionsgoodorb3.EfficiencyWagesThetheoryofefficiencywages:

Firmsvoluntarilypayabove-equilibriumwagestoboostworkerproductivity.Differentversionsofefficiencywagetheorysuggestdifferentreasonswhyfirmspayhighwages.032UNEMPLOYMENT3.EfficiencyWagesThetheory3.EfficiencyWages1. Workerhealth

Inlessdevelopedcountries,poornutritionisacommonproblem.Payinghigherwagesallowsworkerstoeatbetter,makesthemhealthier,moreproductive.2. Workerturnover

Hiring&trainingnewworkersiscostly.

Payinghighwagesgivesworkersmoreincentivetostay,reducesturnover.Fourreasonswhyfirmsmightpayefficiencywages:033UNEMPLOYMENT3.EfficiencyWages1. Worker3.EfficiencyWages3. Workerquality

Offeringhigherwagesattractsbetterjobapplicants,increasesqualityofthefirm’sworkforce.4. Workereffort

Workerscanworkhardorshirk.Shirkersarefired

ifcaught.Isbeingfiredagooddeterrent? Dependsonhowharditistofindanotherjob.

Ifmarketwageisaboveeq’mwage,therearen’tenoughjobstogoaround,soworkershavemoreincentivetoworknotshirk.Fourreasonswhyfirmsmightpayefficiencywages:034UNEMPLOYMENT3.EfficiencyWages3. WorkerACTIVELEARNING3

Applyingtheconcepts35Whichofthefollowingwouldbemostlikelytoreducefrictionalunemployment?A. Thegovteliminatestheminimumwage.B. Thegovtincreasesunemploymentinsurancebenefits.C. Anewlawbanslaborunions.D. MoreworkersposttheirresumesatM,andmoreemployersuseMtofindsuitableworkerstohire.E. Sectoralshiftsbecomemorefrequent.35UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING3

Answers36A. Thegovteliminatestheminimumwage.C. Anewlawbanslaborunions.Thesearelikelytoreduce

structuralunemployment,

notfrictionalunemployment.Whichofthefollowingwouldbemostlikelytoreducefrictionalunemployment?36UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING3

Answers37Whichofthefollowingwouldbemostlikelytoreducefrictionalunemployment?B. Thegovtincreasesunemploymentinsurancebenefits.E. Sectoralshiftsbecomemorefrequent.Thesearelikelytoincrease

frictionalunemployment,notreduceit.37UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING3

Answers38Whichofthefollowingwouldbemostlikelytoreducefrictionalunemployment?D. MoreworkersposttheirresumesatM,andmoreemployersuseMtofindsuitableworkerstohire.Likelytospeeduptheprocessofmatchingworkers&jobs,whichwould

reducefrictionalunemployment.38UNEMPLOYMENTACTIVELEARNINGExplainingtheNaturalRateofUnemployment:ASummaryThenaturalrateofunemploymentconsistsof

frictionalunemployment

IttakestimetosearchfortherightjobsOccursevenifthereareenoughjobstogoaround

structuralunemployment

Whenwageisaboveeq’m,notenoughjobsDuetomin.wages,laborunions,efficiencywagesInlaterchapters,wewilllearnaboutcyclicalunemployment,theshort-termfluctuationsinunemploymentassociatedwithbusinesscycles.039UNEMPLOYMENTExplainingtheNaturalRateofCHAPTERSUMMARYTheunemploymentrateisthepercentageofthosewhowouldliketoworkwhodonothavejobs.Unemploymentandlaborforceparticipationvarywidelyacrossdemographicgroups.Thenaturalrateofunemploymentisthenormalrateofunemploymentaroundwhichtheactualratefluctuates.Cyclicalunemploymentisthedeviationofunemploymentfromitsnaturalrateandisconnectedtoshort-termeconomicfluctuations.4040UNEMPLOYMENTCHAPTERSUMMARYTheunemploymenCHAPTERSUMMARYThenaturalrateincludesfrictionalunemploymentandstructuralunemployment.Frictionalunemploymentoccurswhenworkerstaketimetosearchfortherightjobs.Structuralunemploymentoccurswhenabove-equilibriumwagesresultinasurplusoflabor.Threereasonsforabove-equilibriumwagesincludeminimumwagelaws,unions,andefficiencywages.4141UNEMPLOYMENTCHAPTERSUMMARYThenaturalratUnemploymentMacroeonomicsPRINCIPLESOFN.GregoryMankiwPremiumPowerPointSlides

byRonCronovich15UnemploymentMacroeonomicsPRIInthischapter,

lookfortheanswerstothesequestions:Howisunemploymentmeasured?Whatisthe“naturalrateofunemployment”?Whyaretherealwayssomepeopleunemployed?Howisunemploymentaffectedbyunionsandminimumwagelaws?Whatisthetheoryofefficiencywages,andhowdoesithelpexplainunemployment?4343UNEMPLOYMENTInthischapter,

lookfortheLaborForceStatisticsProducedbyBureauofLaborStatistics(BLS),

intheU.S.Dept.ofLaborBasedonregularsurveyof60,000householdsBasedon“adultpopulation”(16yrsorolder)044UNEMPLOYMENTLaborForceStatisticsProducedLaborForceStatisticsBLSdividespopulationinto3groups:Employed:paidemployees,self-employed,

andunpaidworkersinafamilybusinessUnemployed:peoplenotworkingwhohavelookedforworkduringprevious4weeksNotinthelaborforce:everyoneelseThelaborforceisthetotal#ofworkers,includingtheemployedandunemployed.045UNEMPLOYMENTLaborForceStatisticsBLSdivilaborforceparticipationratelaborforceadultpopulation=100xLaborForceStatisticsLaborforceparticipationrate:

%oftheadultpopulationthatisinthelaborforceUnemploymentrate(“u-rate”):

%ofthelaborforcethatisunemployedu-rate#ofunemployedlaborforce=100x046UNEMPLOYMENTlaborforceparticipationrateACTIVELEARNING1

Calculatelaborforcestatistics47Computethelaborforce,u-rate,adultpopulation,andlaborforceparticipationrateusingthisdata:AdultpopulationoftheU.S.

bygroup,June2008#ofemployed 145.9million#ofunemployed 8.5millionnotinlaborforce 79.2million47UNEMPLOYMENTACTIVELEARNINGLaborforce =employed+unemployed

=145.9+8.5

=154.4millionU-rate =100x(unemployed)/(laborforce)

=100x8.5/154.4

=5.5%ACTIVELEARNING1

Answers4848UNEMPLOYMENTLaborforce =employed+unePopulation =laborforce+notinlaborforce

=154.4+79.2

=233.6LFpartic.rate =100x(laborforce)/(population)

=100x154.4/233.6

=66.1%ACTIVELEARNING1

Answers4949UNEMPLOYMENTPopulation =laborforce+nLaborMarketStatisticsforDifferentGroupsTheBLSpublishesthesestatisticsfordemographicgroupswithinthepopulation.Thesedatarevealwidelydifferentlabormarketexperiencesfordifferentgroups.050UNEMPLOYMENTLaborMarketStatisticsforDiLaborMarketStatisticsforWhites&Blacks,

June2008Adults(20yrs&older)u-rateLFpart.rateWhite,male4.5%76.1%White,female4.260.4Black,male9.371.5Black,female7.464.3051UNEMPLOYMENTLaborMarketStatisticsforWhLaborMarketStatisticsforWhites&Blacks,

June2008Teens(16-19yrs)u-rateLFpart.rateWhite16.643.9Black29.627.9052UNEMPLOYMENTLaborMarketStatisticsforWhLaborMarketStatisticsforOtherGroups,

June2008Allagesu-rateLFpart.rateAsian4.567.4Hispanic7.769.0053UNEMPLOYMENTLaborMarketStatisticsforOtLaborMarketStatisticsbyEducationLevel,

June2008Adults(25yrs&older)u-rateLFpart.ratelessthanh.s.8.7%45.9%h.s.diploma5.162.8somecollegeorassocdegree4.271.9bachelor’sdegreeormore2.378.1054UNEMPLOYMENTLaborMarketStatisticsbyEduLFParticipationRatesbySex,1950-2007MenWomen055UNEMPLOYMENTLFParticipationRatesbySex,ACTIVELEARNING2

Limitationsoftheu-rate56Ineachofthefollowing,whathappenstotheu-rate?Doestheu-rategiveanaccurateimpressionofwhat’shappeninginthelabormarket?A. Suelostherjobandbeginslookingforanewone.B. Jon,asteelworkerwhohasbeenoutofworksincehismillclosedlastyear,becomesdiscouragedandgivesuplookingforwork.C. Sam,thesoleearnerinhisfamilyof5,justlosthis$80,000jobasaresearchscientist.Immediately,hetakesapart-timejobatMcDonald’suntilhecanfindanotherjobinhisfield.56UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers57A. Suelostherjobandbeginslookingforanewone.u-raterisesArisingu-rategivestheimpressionthatthelabormarketisworsening,anditis.57UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers58B. Jonhasbeenoutofworksincelastyear,

becomesdiscouraged,stopslookingforwork.Discouragedworkers

wouldliketoworkbuthavegivenuplookingforjobsclassifiedas“notinthelaborforce”ratherthan“unemployed”U-ratefallsbecauseJonisnolongercountedasunemployed.Afallingu-rategivestheimpressionthatthelabormarketisimproving,butitisnot.58UNEMPLOYMENTACTIVELEARNINGACTIVELEARNING2

Answers59C. Samlosthis$80,000job,andtakesapart-timejobatMcDonald’suntilhefindsabetterone.U-rateunchangedbecauseapersonis“employed”whethertheyworkfullorparttime.Thingsareworse,buttheu-ratefailstoshowit.59UNEMPLOYMENTACTIVELEARNINGWhatDoestheU-RateReallyMeasure?Theu-rateisnotaperfectindicatorofjoblessnessorthehealthofthelabormarket:Itexcludesdiscouragedworkers.Itdoesnotdistinguishbetweenfull-timeand

part-timework,orpeopleworkingparttimebecausefull-timejobsnotavailable.SomepeoplemisreporttheirworkstatusintheBLSsurvey.Despitetheseissues,theu-rateisstillaveryusefulbarometerofthelabormarket&economy.060UNEMPLOYMENTWhatDoestheU-RateReallyMeTheDurationofUnemploymentMostspellsofunemploymentareshort:Typically1/3oftheunemployed

havebeenunemployedunder5weeks,

2/3havebeenunemployedunder14weeks.Only20%havebeenunemployedover6months.Yet,mostobservedunemploymentislongterm.Thesmallgroupoflong-termunemployedpersonshasfairlylittleturnover,soitaccountsformostoftheunemploymentobservedovertime.Knowingthesefactshelpspolicymakersdesignbetterpoliciestohelptheunemployed.061UNEMPLOYMENTTheDurationofUnemploymentMoCyclicalUnemploymentvs.theNaturalRateThere’salwayssomeunemployment,thoughtheu-ratefluctuatesfromyeartoyear.NaturalrateofunemploymentthenormalrateofunemploymentaroundwhichtheactualunemploymentratefluctuatesCyclicalunemploymentthedeviationofunemploymentfromits

naturalrateassociatedwithbusinesscycles,

whichwe’llstudyinlaterchapters062UNEMPLOYMENTCyclicalUnemploymentvs.the0246810121960196519701975198019851990199520002005U.S.Unemployment,1960-2007NaturalrateofunemploymentUnemploymentrate0percentageoflaborforce63UNEMPLOYMENT024681012196019651970197519801ExplainingtheNaturalRate:AnOverviewEvenwhentheeconomyisdoingwell,thereisalwayssomeunemployment,including:Frictionalunemploymentoccurswhenworkersspendtimesearchingforthejobsthatbestsuittheirskillsandtastesshort-termformostworkersStructuralunemploymentoccurswhentherearefewerjobsthanworkersusuallylonger-term064UNEMPLOYMENTExplainingtheNaturalRate:JobSearchWorkershavedifferenttastes&skills,and

jobshavedifferentrequirements.Jobsearchistheprocessofmatchingworkers

withappropriatejobs.Sectoralshiftsarechangesinthecompositionofdemandacrossindustriesorregionsofthecountry.Suchshiftsdisplacesomeworkers,

whomustsearchfornewjobsappropriate

fortheirskills&tastes.Theeconomyisalwayschanging,

sosomefrictionalunemploymentisinevitable.065UNEMPLOYMENTJobSearchWorkershavedifferePublicPolicyandJobSearchGovtemploymentagencies

provideinformationaboutjobvacanciestospeedupthematchingofworkerswithjobs.Publictrainingprograms

aimtoequipworkersdisplacedfromdecliningindustrieswiththeskillsneededingrowingindustries.066UNEMPLOYMENTPublicPolicyandJobSearchGoUnemploymentInsuranceUnemploymentinsurance(UI):

agovtprogramthatpartiallyprotectsworkers’incomeswhentheybecomeunemployedUIincreasesfrictionalunemployment.

Toseewhy,recalloneofthe

TenPrinciplesofEconomics:

Peoplerespondtoincentives.

UIbenefitsendwhenaworkertakesajob,

soworkershavelessincentivetosearchor

takejobswhileeligibletoreceivebenefits.067UNEMPLOYMENTUnemploymentInsuranceUnemployUnemploymentInsuranceBenefitsofUI:ReducesuncertaintyoverincomesGivestheunemployedmoretimetosearch,resultinginbetterjobmatchesandthushigherproductivity068UNEMPLOYMENTUnemploymentInsuranceBenefitsExplainingStructuralUnemploymentStructuralunemployment

occurswhennotenoughjobsto

goaround.WLDSWEactualwageW1unemp-loymentOccurswhenwage

iskeptaboveeq’m.Therearethreereasonsforthis…069UNEMPLOYMENTExplainingStructuralUnemploy1.Minimum-WageLawsThemin.wagemayexceedtheeq’mwage

fortheleastskilledorexperiencedworkers,causingstructuralunemployment.Butthisgroupisasmallpartofthelaborforce,sothemin.wagecan’texplainmostunemployment.070UNEMPLOYMENT1.Minimum-WageLawsThemin.2.UnionsUnion:aworkerassociationthatbargainswithemployersoverwages,benefits,andworkingconditionsUnionsexerttheirmarketpowertonegotiatehigherwagesforworkers.Thetypicalunionworkerearns20%higherwagesandgetsmorebenefitsthananonunionworkerforthesametypeofwork.071UNEMPLOYMENT2.UnionsUnion:aworkerass2.UnionsWhenunionsraisethewageaboveeq’m,

quantityoflabordemandedfallsandunemploymentresults.“Insiders”–workerswhoremainemployed,

theyarebetteroff“Outsiders”–workerswholosetheirjobs,

theyareworseoffSomeoutsidersgotonon-unionizedlabormarkets,whichincreaseslaborsupplyandreduceswagesinthosemarkets.072UNEMPLOYMENT2.UnionsWhenunionsraiseth2.UnionsAreunionsgoodorbad?Economistsdisagree.Critics:

Unionsarecartels.Theyraisewagesaboveeq’m,whichcausesunemploymentand/ordepresseswagesinnon-unionlabormarkets.Advocates:

Unionscounterthemarketpoweroflargefirms,makefirmsmoreresponsivetoworkers’concerns.073UNEMPLOYMENT2.UnionsAreunionsgoodorb3.EfficiencyWagesThetheoryofefficiencywages:

Firmsvoluntarilypayabove-equilibriumwagestoboostworkerproductivity.Differentversionsofefficiencywagetheorysuggestdifferentreasonswhyfirmspayhighwages.074UNEMPLOYMENT3.EfficiencyWagesThetheory3.EfficiencyWages1. Workerhealth

Inlessdevelopedcountries,poornutritionisacommonproblem.Payinghigherwagesallowsworkerstoeatbetter,makesthemhealthier,moreproductive.2. Workerturnover

Hiring&trainingnewworkersiscostly.

Payinghighwagesgivesworkersmoreincentivetostay,reducesturnover.Fourreasonswhyfirmsmightpayefficiencywages:075UNEMPLOYMENT3.EfficiencyWages1. Worker3.EfficiencyWages3. Workerquality

Offeringhigherwagesattractsbetterjobapplicants,increasesqualityofthefirm’sworkforce.4. Workereffort

Workerscanworkhardorshirk.Shirkersarefired

ifcaught.Isbeingfiredagooddeterrent? Dependsonhowharditistofindanotherjob.

Ifmarketwageisaboveeq’mwage,therearen’tenoughjobstogoaround,soworkershavemoreincentivetoworknotshirk.Fourreasonswhyfirmsmightpayefficiencywages:076UNEMPLOYMENT3.EfficiencyWages3. WorkerACTIVELEA