ECON 102 Lecture Notes - Lecture 9: Efficiency Wage, Market Power, Frictional Unemployment
12 Jun 2019
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Document Summary
Unemployment can be divided into two categories: long term problem, short term problem. Natural rate of unemployment- amount of unemployment the economy normally experiences. This is normally around 6-8 percent in canada. Cyclical unemployment- year to year fluctuations in unemployment around natural rate. Cyclical unemployment is closely related to the ups and downs of economic activity. Explanations for the natural rate of unemployment are: job search, minimum wage jobs, unions and efficiency wages. How is unemployment measured: every month a survey is conducted, 54000 people are sampled, data such as unemployment, types of employment, length of average work week and duration of unemployment are all recorded. Everyone over the age of 15 is subject to be either: employed, unemployed, not in labor force. One is employed when he or she spent time in the past week working at a paid job. One is unemployed when he or she is laid off or currently searching for a job.
