EC140 Lecture Notes - Lecture 18: Underemployment, Nairu, Unemployment Benefits
21
EC140 Full Course Notes
Verified Note
21 documents
Document Summary
In the long-run, increases in employment (on average) match increases in the labour force. In the short-run, changes in unemployment depend on output gaps. People move from employment to unemployment, or between jobs, very frequently: stable employment data hides considerable labour force movements. Unemployment rates depend on the fraction of the labour force that does not have a job. Discouraged workers are those that have stopped looking - not captured in the data. Underemployment is not generally captured: part-time work, when would prefer full-time work, work requiring skills much lower than a previous job, these people generally keep searching for work. Lost output: permanent cost of output that is not produced. Personal costs: 7 to 12% of unemployed workers are unemployed for 12 months or longer, long-term unemployment may lead to declines in labour productivity. Personal costs are difficult to measure - but may be larger than the output costs. Supply of labour and demand for labour determine market wage/quantity.
