Lecture 14 - ECON 3133-02: Unemployment Rate, Labor Market Characteristics, and Wages, Study notes of Economics

Download Lecture 14 - ECON 3133-02: Unemployment Rate, Labor Market Characteristics, and Wages and more Study notes Economics in PDF only on Docsity! Lecture #14 ECON 3133-02 October 11, 2005 Coverage: Chapters 6. Class questions: 1. In September of 2005, we had the following: Civilian Labor Force: 150,093,000 Unemployed: 7,661,000 Use this information to calculate the unemployment rate in September of 2005. Unemployment rate= 7,661,000/150,093,000 = 0.051 (or 5.1%). 2. As discussed in class, what are three characteristics of the U.S. labor market regarding the composition of the employed, unemployed, and those not in the labor force? a. The flow in and out of employment status has been quite large. On average, between 1994 and 1999, roughly 1.5 million workers who were employed became unemployed in a given month in the United States, while 1.7 million employed workers left the labor force each month. In addition, about 3.5 million left their job and found another in the same month. Thus, about 6.7 million workers on average left their job each month during this time period. b. The flow in and out of unemployment status has been quite large. During the same time period described above, on average, 1.8 million of the roughly 7 million unemployed workers became employed each month, while 1.3 million unemployed workers left the labor force each month. This suggests that in fact the duration of unemployment tends to be quite short (on average about 3 months). c. Finally, the flow in and out of the labor force has been quite large. Roughly 1.5 million eligible workers that were considered out of the labor force became employed each month for the same time period described above, while 1.1 million that were out of the labor force moved into unemployment status. Also note from above, that a number of employed workers moved into the category “out of the labor force.” Existing data suggests that new entrants into the labor market and retiring workers can only explain a relatively small component of the movement in and out of the labor force. Thus, it is very likely that a number of these workers could be categorized as discouraged workers.