- Midterm 1 is on Monday; room assignments are posted on the class website- Bridge is on Sunday from 4 to 6 pm at Union South- A review/office hour will be held this Thursday from 5 to 6:30 pm in 5106 social sciences- Examo 50 minutes longo Come earlyo NO cell phoneso No calculatorso Bring your UW ID & a #2 pencilo 10 binary choice questions worth 2.5 points eacho 15 multiple choice questions worth 5 points each--------------------------------------------------------------------------------------------------------------------------------- Unemployment continuedo Those not in the labor force: Military Homemakers Full time students Those unable to work Retired Voluntarily idle Institutionalized *Discouraged workers: people not working but available for work who have tried to find a job in the last 12 months but have not tried in the last 4 weeks and have given up on trying to find oneo Civilian labor force (LF) = unemployed + employedo Unemployment rate = [(# unemployed)/(LF)]*100%o LF participation rate = [(LF)/(population above the age of 16)]*100%o Types of unemployment Seasonally unemployed- E.g. construction workers in the winter- E.g. ski instructors in the summer *Frictional unemployment: unemployment due to time workers spend in the jobsearch- E.g. it takes time for you to get hired after you graduate- This is a good thing because time allows you to find a job that’s a good fit for you (instead of taking the first job you can get)- Frictional unemployment is due to job creation & destruction- *These are the normal workings of the labor market (frictional unemployment is expected)- Frictional unemployment rate = [(# frictionally unemployed)/(LF)]*100%(this formula works for other types of unemployment as well) *Structural unemployment: unemployment when there are more people seeking jobs in a labor market than there are jobs available at the current wage rateSWDQ of labor- It is caused by:o Structural changes to the economy: demand is lowered for certain types of workers (e.g. there is now less demand for secretaries than there used to be)o Effective minimum wage legislationo Effective labor unions that negotiated a wage higher than the market clearing rateo Efficiency wages: when the employer pays a wage greater than the market clearing wage The employer gets better quality labor And more loyal workers There is incentive for workers to self-monitor (often because the employer can’t monitor them; e.g. babysitters)o Safety net: government programs- *These are the normal workings of the labor market (frictional unemployment is expected)o Natural rate of unemployment = frictional + structural unemployment (seasonal is already accounted for)o Cyclical unemployment rate = actual unemployment rate – natural unemployment rate When actual = natural, cyclical = 0 & there is a full level of production (which is good) When actual > natural, cyclical > 0 & there is less than full employment (which means there is a recession) When actual < natural, there is a
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