LABOR ECON-CONNECT ACCESS
8th Edition
ISBN: 9781264604197
Author: BORJAS
Publisher: MCG
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Chapter 12, Problem 15P
(a)
To determine
Explain why asking wages and expected
(b)
To determine
Explain whether the standard job search model explains the unemployment duration is longer or not.
(c)
To determine
Explain the effect of the equilibrium unemployment rate.
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Q. 12-15. Consider the standard job search model as described in the text.
(a) Why are the asking wage and expected unemployment duration positively related?
(b) Can the standard job search model explain why unemployment duration is longer, on average, for secondary workers when compared to primary workers? Discuss.
(c) In the context of the standard search model, explain how the economy-wide average asking wage and unemployment duration are affected by an expanded underground (cash) economy. What is the effect on the equilibrium unemployment rate?
BOOK: Labor Economics, 8th Edition, by George Borjas, published by McGraw-Hill. Chapter 12
The bathtub model of unemployment revisited - Lt is the labor force, Ut is the number of unemployed workers and Et the number of employed workers in period t. The separation rate and the job finding rate in period t are correspondingly st and ft. Assume that Lt+1 = (1 + n) Lt and a share dt of the new workers, Lt+1 Lt, are employed immediately as they enter the labor force.
Write and explain the equation describing the level of unemployment in period t + 1, Ut+1; as a function of current unemployment, Ut, current employment, Et, and increase in the labor force, Lt+1 L
Do the migration trends, unemployment trends and rural-urban income ratio trends behave in the way you would expect based on the Harris-Todaro model? Explain.
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