Chapter 17 - Wages & unemployment

real wage

For a given ________, any factor that increases the number of people available and willing to work increases the supply of labor and shifts the labor supply curve to the right.

extra revenue

A firm will employ a worker only if the worker's value of marginal product, which is the same as the ________ the worker generates for the firm, exceeds the real wage that the firm must pay.

Participation rate

________: percentage of the working age population in the labor force (that is, the percentage that is either employed or looking for work)

amount of capital

Diminishing returns to labor: if the ________ and other inputs in use is held constant, then the greater the quantity of labor already employed, the less each additional worker adds to production.

Labor force

________: total number of employed and unemployed people in the economy.

real wage

For a given ________, any change that increases the value of workers 'marginal products will increase the demand for labor and shift the labor demand curve to the right.

Diminishing returns to labor

if the amount of capital and other inputs in use is held constant, then the greater the quantity of labor already employed, the less each additional worker adds to production

Labor force

total number of employed and unemployed people in the economy

Unemployment rate

number of unemployed people divided by the labor force

Participation rate

percentage of the working age population in the labor force (that is, the percentage that is either employed or looking for work)

Unemployment spell

period during which an individual is continuously unemployed

Frictional unemployment

short-term unemployment associated with the process of matching workers with jobs

Structural unemployment

long-term and chronic unemployment that exists even when the economy is producing at a normal rate

Cyclical unemployment

extra unemployment that occurs during periods of recession

Diminishing returns to labor

If the amount of capital and other inputs in use is held constant, then the greater the quantity of labor already employed, the less each additional worker adds to production

Labor force

Total number of employed and unemployed people in the economy

Unemployment rate

Number of unemployed people divided by the labor force

Participation rate

Percentage of the working age population in the labor force (that is, the percentage that is either employed or looking for work)

Unemployment spell

Period during which an individual is continuously unemployed

Frictional unemployment

Short-term unemployment associated with the process of matching workers with jobs

Structural unemployment

Long-term and chronic unemployment that exists even when the economy is producing at a normal rate

Cyclical unemployment

Extra unemployment that occurs during periods of recession