Journaling of Chapter 28:Unemployment

Chapter 28, titled ‘Unemployment’, introduces us to the labor market. We see how economists measure the performance of the labor market using unemployment statistics. It also addresses a number of sources of unemployment and some policies that the government might use to lower certain types of unemployment. The Bureau of Labor Statistics (BLS) uses the Current Population Survey to categorize all surveyed adults (age 16 and older) as employed, unemployed, or not in the labor force. BLS then computes labor force = number of employed + number of unemployed, unemployment rate = (number of unemployed/labor force) × 100, and labor-force participation rate = (labor force/adult pop.) × 100. Evidence suggests that most spells are short term, but most unemployment at any given time is long term. Job search is the process of matching workers and jobs. Minimum-wage laws are one source of structural unemployment. Recall that minimum-wage laws force the wage to remain above the equilibrium wage. If a wage is held above the equilibrium level, the result is unemployment. A union is a worker association that engages in collective bargaining with employers over wages, benefits, and working conditions. A union is a cartel because it is a group of sellers organized to exert market power. The theory of efficiency wages suggests that firms may intentionally hold wages above the competitive equilibrium because it is efficient for them to do so.

Overall, I would give this chapter a difficulty rating of 2 out of 3. The concepts aren’t particularly hard but there’s a lot of subject matter to cover. So as of right now, it’s a little difficult to fully comprehend everything.