EC 111 - Unemployment

What is the primary source of Labor Force Statistics in the U.S.?

Produced by the Bureau of Labor Statistics (BLS) in the U.S. Department of Labor.

What age group does the BLS consider for the adult population in labor statistics?

Individuals aged 16 years or older.

What are the three groups into which the BLS divides the population?

Employed, Unemployed, and Not in the labor force.

How is the labor force defined?

The total number of workers, including both the employed and unemployed.

What does the unemployment rate (u-rate) measure?

The percentage of the labor force that is unemployed.

What is the labor force participation rate?

The percentage of the adult population that is in the labor force.

What happens to the u-rate when a discouraged worker stops looking for a job?

The u-rate decreases, as discouraged workers are classified as 'not in the labor force' rather than 'unemployed.'

What is frictional unemployment?

Unemployment that occurs when workers are searching for jobs that best suit their skills and preferences.

What is structural unemployment?

Unemployment that occurs when there are fewer jobs than workers, often longer-term.

What is the natural rate of unemployment?

The normal rate of unemployment around which the actual unemployment rate fluctuates.

What is cyclical unemployment?

The deviation of unemployment from its natural rate, associated with business cycles.

What is unemployment insurance (UI)?

A government program that partially protects workers' incomes when they become unemployed.

How does unemployment insurance affect job search behavior?

It can increase frictional unemployment by reducing the incentive to search for jobs while receiving benefits.

What is an efficiency wage?

A wage set above the prevailing market wage to encourage greater worker productivity.

What role do unions play in structural unemployment?

Unions negotiate higher wages, which can lead to a decrease in the quantity of labor demanded and result in unemployment.

What is the employment-at-will doctrine?

The principle that an employee may quit and an employer may fire at any time for any reason, with some exceptions.

What are sectoral shifts?

Changes in the composition of demand across industries or regions that can displace workers.

What is the impact of occupational licensing on job search?

It can create barriers to entry for workers, affecting their ability to find suitable jobs.

What is the relationship between job search and labor market dynamics?

Job search is the process of matching workers with appropriate jobs, influenced by changing economic conditions.

What is the significance of the labor force participation rate?

It indicates the percentage of the adult population that is actively engaged in the labor market.

What happens to the labor force participation rate when more workers post resumes online?

It is likely to increase as more workers engage in job searching.

What is the effect of increasing unemployment insurance benefits on the labor market?

It may lead to higher frictional unemployment as workers may delay job acceptance.

How does structural unemployment relate to wage levels?

It can occur when wages are kept above equilibrium, leading to a surplus of labor.

What is the role of public/private retraining programs?

They aim to equip displaced workers with skills needed in growing industries.

How does the BLS survey account for misreporting of work status?

Misreporting can affect the accuracy of labor statistics, including the unemployment rate.