Global Chapter 7: Labor Market

working age population,The total number of people above around 15/16 until 65 who are able to work (ages vary by country)

labor force,the total number of workers, including both the employed and the unemployed (searching for jobs)

labor force participation rate,the percentage of the working-age population in the labor force labor force participation rate formula,labor force/working age population x 100

unemployment rate,the percentage of the labor force that is unemployed, and actively seeking a job

unemployment rate equation,unemployed/labor force x 100 employment rate,the proportion of the adult population that is employed

Employment rate equation,employed/population of working age Wage Setting Relation,W= P^eF(u,z)

What do each term mean in the wage setting relation?,P^e= expected price level u= unemployment rate z= other variables

What is the relationship between wage and unemployment? What about wage and z?,Wage and unemployment have negative relationship Wage and z have positive relationship

Price setting relation,W/P = 1/(1+m)

Wage setting and Price Setting equilibrium (algebraically),1/1+m = F (un, z)

what shifts the wage and price setting relations?,Price relation shifts by m Wage relation shifts by z

What does the Wage Setting curve look like?,negative sloping curve

What does the Price Setting Curve look like?,horizontal line, because price is constant and unaffected by unemployment