Discuss the five important labor market trends and its effect on labor productivity.
Explanation of Solution
There are five important trends in labor market. These are classified into two groups as trends in real wages and trends in employment and
- Extensive growth in real wage rate over the twentieth century.
- Decreasing trend in real wage rate since the early 1970.
- An increase in wage inequality in U.S.
- Decreasing trend in the rapid employment growth in past 50 years.
- High rates of unemployment in European countries during the past three decades.
Among these trends, the first three come under the category of trends in real wage and the remaining two comes under the category of trends in employment and unemployment. Extensive growth in real wage represents an increase in labor productivity and as a result, the demand for labor exceeds the supply of labor. A fall in real wage reduces labor productivity and the demand for and supply of labor grew equally. An increase in real wage among higher labor productivity increases the living standard of people. On the other hand, an increase in real wage for some workers increase the wage inequality while, in European countries potential laborers have been sidelined by a higher rate of unemployment.
Want to see more full solutions like this?
Chapter 8 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
- Discuss how it is simultaneously possible for “most” unemployment to be due to short spells and for “most” unemployment to be accounted for by a few persons in very long spells.arrow_forwardWhich statement correctly describes the U.S. labor force participation rate? The U.S. labor force participation rate _______. A. has an upward trend that is mainly accounted for by the increasing participation of men in the labor market B. is calculated as the percentage of the labor force who are employed C. increased from 59 percent in 1960 to 67 percent in 1999 D. for women is higher than the female labor force participation rates in Canada and the United Kingdomarrow_forwardConsider the following economy. In year 1, there are 40 identical homes occupied by the residents. Ten out of 40 homes are rented, and the remaining 30 are owner-occupied. The annual rent for each home is K dollars (where K stands for thousand). In the same year, 10 additional homes are built, however, they are not sold or occupied, in the country. The price of a newly constructed home in Year 1 is 50K dollars. In Year 2, there is a total of 50 occupied homes in the country of which 20 is rented and the remaining 30 is owner-occupied. The rent on a rental home decreases by 20% to 0.8K dollars. In year 2, there is no new construction. In year 3, there is a fire that destroys 5 owner-occupied homes so that only 45 homes are occupied. The annual rent increases back to K dollars per home. There is no new construction in Year 3. However, the government puts a big tent to shelter those who lost their homes in fire. In total, the government spends 2K dollars for this emergency housing of 5…arrow_forward
- Why does the employment-population ratio have an upward trend from 1960 to 2000? The employment-population ratio has an upward trend because _______. A. the employment-population ratio for men increased B. the employment-population ratio for women increased C. the size of the working-age population was increasing D. the size of the labor force was increasing Thanks!!!arrow_forwardHere is some data for an economy. Population: 22.5 million Population under the age of 16 years: 7.5 million Discouraged workers: 250,000. Retired people: 1 million Structurally unemployed people: 320,000 Frictionally unemployed people: 220,000 Cyclically unemployed people: 2.2 million The labour force participation rate can be calculated as [(# in Labour Force) / (Adult Population)] *100. Based on this formula, what is the approximate labour force participation rate in this economy? Answers: 91.7% 100% 93.3% 98.3%arrow_forwardQ33 In order to maximize profits, a firm needs to determine the quantity of each factor that it will employ, which is dictated by price as well as productivity of the factor. Assume farmer in the Ottawa area named Justin Trudeau has fixed amounts of land and capital and finds that total product is 24 for the first worker hired, 32 when two workers are hired, 37 when three are hired, and 40 when four are hired. Justin Trudeau product sells for $3 per unit, and the wage rate is $13 per worker. The marginal product of the second worker is Multiple Choice 32 14. 8 1 5arrow_forward
- [Consider the effects of an increase in the global price of oil. For a country such as Australia, which is a net exporter of oil, this development will imply that the CPI will increase roughly by the same amount as the increase in the GDP deflator.arrow_forwardIdentify the following variables as procyclical, countercyclical, or acyclical: (1) consumption, (2) real wage, (3) employment, and (4) total factor productivity.arrow_forwardClassify each of the following individuals in one of the following categories: employed, unemployed, or not in the labor force. - Last week, Elizabeth worked 10 hours as a computer programmer for the National Video Company and attended night classes at the local college. She would prefer a full-time job. - Linda’s father is unable to work. - Mary-Helen has been out of work for a full year. She would take a job if it was offered, but no local companies are hiring. She is not actively searching for work.arrow_forward
- The following table shows the annual average data on the employment status of the U.S. civilian noninstitutional population by age in 2017. Age Employed Unemployed Not in Labor Force (Thousands of People) (Thousands of People) (Thousands of People) 16 to 19 years 5,074 827 10,853 20 to 24 years 14,132 1,127 6,137 25 to 54 years 98,833 3,850 23,014 55 to 64 years 26,064 835 14,792 65 years and over 9,234 343 39,964 Total 153,337 6,982 94,759 Source: “Labor Force Statistics from the Current Population Survey.arrow_forwardThe following table shows the annual average data on the employment status of the U.S. civilian noninstitutional population by age in 2017. Age Employed Unemployed Not in Labor Force (Thousands of People) (Thousands of People) (Thousands of People) 16 to 19 years 5,074 827 10,853 20 to 24 years 14,132 1,127 6,137 25 to 54 years 98,833 3,850 23,014 55 to 64 years 26,064 835 14,792 65 years and over 9,234 343 39,964 Total 153,337 6,982 94,759 Source: “Labor Force Statistics from the Current Population Survey.”Bureau of Labor Statistics. What is the national unemployment rate? 2.7% 4.4% 7.4% 59.1% Complete the following table by computing the unemployment rate for each age group. Age Unemployment Rate 16 to 19 years 20 to 24 years 25 to 54 years 55 to 64 years 65 years and over Which of the following groups has an unemployment rate lower…arrow_forwardWe are given the following information for UWI Land. At the start of the period, there are 334,250 employed workers, 15,750 unemployed and 150,000 not in the labour force. During the period 500 workers lost their jobs but are currently looking for a new one; 1000 employed workers decided to retire; 2500 were unemployed but just started a new job. Of the workers not in the labour force 5,000 workers entered the labour force but are still looking for a job and 21,000 workers just found a job. How many workers are employed? How many workers are unemployed? How many workers were in the labour force? How many workers are not in the labour force? Calculate the unemployment rate. % Calculate the labour force participation rate. % Calculate the employment to population ratio. (using 1 decimal place) %arrow_forward
- Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStaxMacroeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506756Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning