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Chapter 9, part 2

by: Joe Wise

Chapter 9, part 2 ECON 222 001

Joe Wise
GPA 3.86
Principles of Macroeconomics
Chandini Sankaran

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About this Document

Here are my notes from the lectures on October 27 and 29. It's all about GDP and unemployment.
Principles of Macroeconomics
Chandini Sankaran
Class Notes
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This 0 page Class Notes was uploaded by Joe Wise on Sunday November 1, 2015. The Class Notes belongs to ECON 222 001 at University of South Carolina taught by Chandini Sankaran in Summer 2015. Since its upload, it has received 15 views. For similar materials see Principles of Macroeconomics in Economcs at University of South Carolina.


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Date Created: 11/01/15
October 27 2015 The establishment survey is used by the BLS to determine employment by surveying 300000 establishments This method often causes large uctuations in data and doesn t include self employed people or new businesses The household survey is done to compliment the establishment survey so that people can report themselves what their employment status is Every year tons of jobs are created and destroyed in the US economy Unemployment never reaches zero and the long term average of unemployment is called natural rate of unemployment Natural unemployment is the US is between 5 and 6 percent Natural unemployment is caused by frictional unemployment and structural unemployment Cyclical unemployment is short term uctuations in unemployment Frictional unemployment is the time is takes to match workers with a job that they re able and willing to perform The most common type is the time after graduating before finding a job A sectoral shift is when employment drops in one industry and increases in another Usually due to change in consumer demand or technology Structural unemployment is when the number of jobs in a labor market is lower than the number of people seeking jobs in that labor market Minimum wage laws and unions increase structural unemployment Supply and demand curves can be drawn with labor markets just like with any other markets The X axis is quantity of workers and the y axis is wages The labor supply curve represents how many people want to work while the labor demand curve represents how many workers firms would like to hire October 29 2015 Structural unemployment can theoretically be completely eliminated by lowering minimum wage and increasing education However frictional unemployment can never be completely eliminated Government often tries to reduce unemployment by subsidizing new hires and offering training However they also increase unemployment every time they raise minimum wage laws or tighten up labor laws Teenagers and unskilled workers are most likely to receive minimum wage so every time minimum wage is increased it causes an increase in unemployment but specifically in teenage unemployment Unemployment insurance makes people more likely to turn down a worse job in pursuit of a better one This can actually increase unemployment Unemployment rates in the US are lower than most western European countries and unemployment benefits are harder to get Labor unions are groups of workers that collectively bargain for better wages and working conditions Labor unions use tools such as strikes to negotiate A strike is a formal withdrawal from labor by a group usually a union in order to force the employer to do something Union members earn 20 more on average than regular workers They also get better benefits and working conditions This costs more for employers and forces them to fire people or hire less thus increasing unemployment


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