Unemployment: High In Europe, Low in America

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Unemployment: High In Europe, Low in America While American unemployment rates fell to unusually low levels in the late I99Os. European unemployment rose sharPly over the last three decades. Figure 31-10 on page 679 shows the unemployment history in the two regions How can we explain the divergent labor markets of these two regions! Part of the reason probably lies in […]

Teenage Unemployment of Minority Groups

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Teenage Unemployment of Minority Groups While most evidence suggests that unemployment is largely frictional for white teenagers, the labor market for young African-American workers has behaved quite differently. For the first decade after World War II, the labor-force participation rates and unemployment rates of black and white teenagers were virtually identical. After. that time, however, unemployment rates for black teenagers rose sharply […]

Unemployment by Age

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Unemployment by Age How does unemployment vary over the life cycle? Teenagers generally have the highest unemployment rate of any demographic group, and nonwhite teenagers in recent years have experienced renouncement rates between 30 and 50 percent. Is this employment frictional, structural, or cyclical Recent’ evidence indicates that, particularly for rites, teenage unemployment has a large frictional component. Teenagers move in and […]

Sources of Joblessness

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Sources of Joblessness Why are people unemployed? Figure 31-8 shows how people responded when asked the source of their unemployment, looking at the recession year of 1982 and the high employment year of 1999. There is always some frictional unemployment that results from changes in people’s residence or from the life cycle-s-moving, entering the labor force for the-first time, and so […]

Duration of Unemployment

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Duration of Unemployment Another key question concerns duration. How much of the unemployment experience is long term and of major social concern, and how much is short term as people move quickly between jobs? Figure 31-7 shows the duration of unemployment . in full-employment year of 1999. A surprising feature of American labor markets is that a very large fraction of unemployment […]

Who Are the Unemployed

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Who Are the Unemployed We can diagnose labor market conditions ‘by comparing years in which output is above its potential (of which 1999-2000 was a recent period) with those of deep recessions (such as was seen in 1982), Differences between these years show how business cycles affect the amount, sources, duration, and distribution of unemployment. Table 31-3 shows unemployment statistics for boom […]

To summarize

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To summarize: Most ‘wages in America and other marketeconomies are administered by firms or contracts. Wages and salaries are set infrequently and adjust. to meet shortages or surpluses only over an extended period of time Let’s go a step further and ask, What is the economic reason for the .sluggishness of wages and salaries? Many economists believe that the inflexibility arises […]

Sources of Wage Inflexibility

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Sources of Wage Inflexibility The theory of inyoluntary unemployment assumes that wages are inflexible. But this raises a further question: Why do wages not move up or down to clear markets? Why are labor markets not iike the auction markets for grain, corn, and common stocks? These questions are among the deepest unre- .solved mysteries of modern economics. Feweconomists today would […]

Voluntary and Involuntary Unemployment

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Voluntary and Involuntary Unemployment Let us first start by examining the causes of voluntary unemployment in a typical labor marker.A group of workers has a labor supply schedule shown as SS in Figure 31-6 on page 672. The supply curve becomes completely’ inelastic at labor quantity when wage levels are high. We will call L the labor force. The left-hand panel […]