《西方经济学》课程PPT教学课件（宏观经济学）Chapter 06 Unemployment

CHAPTER SIX Unemployment ooeu macroeconomics N.Gregory Mankiw College of Management,HUST

macroeconomics N. Gregory Mankiw macro College of Management, HUST CHAPTER SIX Unemployment

Chapter objectives The natural rate of unemployment: what it means ■what causes it -understanding its behavior in the real world CHAPTER 6 Unemployment slide 1

slide 1 The natural rate of unemployment: § what it means § what causes it § understanding its behavior in the real world

Content 1.The natural rate of unemployment: 2.Frictional unemployment 2.1 Causes of frictional unemployment 2.2 The effect of public policy 3.Unemployment from wage rigidity 4.Chapter summary CHAPTER 6 Unemployment slide 2

slide 2 1. The natural rate of unemployment: 2. Frictional unemployment 2.1 Causes of frictional unemployment 2.2 The effect of public policy 3. Unemployment from wage rigidity 4. Chapter summary

Natural Rate of Unemployment ■ Natural rate of unemployment: the average rate of unemployment around which the economy fluctuates. -In a recession,the actual unemployment rate rises above the natural rate. -In a boom,the actual unemployment rate falls below the natural rate. CHAPTER 6 Unemployment

§ Natural rate of unemployment: the average rate of unemployment around which the economy fluctuates. § In a recession, the actual unemployment rate rises above the natural rate. § In a boom, the actual unemployment rate falls below the natural rate. 1

U.S.Unemployment,1958-2002 11 098 65 4 3 2 1955196019651970197519801985199019952000 -Unemployment rate -Natural rate of unemployment CHAPTER 6 Unemployment slide 4

slide 4 2 3 4 5 6 7 8 9 10 11 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 P e r c e n t o f la b o r f o r c e Unemployment rate Natural rate of unemployment 1

A first model of the natural rate Notation: L=#of workers in labor force E=#of employed workers U=#of unemployed UL unemployment rate CHAPTER 6 Unemployment slide 5

slide 5 Notation: L = # of workers in labor force E = # of employed workers U = # of unemployed U/L = unemployment rate 1

Assumptions: 1.L is exogenously fixed. 2.During any given month, s fraction of employed workers that become separated from their jobs, f=fraction of unemployed workers that find jobs. s rate of job separations f=rate of job finding (both exogenous) CHAPTER 6 Unemployment slide 6

slide 6 1. L is exogenously fixed. 2. During any given month, s = fraction of employed workers that become separated from their jobs, f = fraction of unemployed workers that find jobs. s = rate of job separations f = rate of job finding (both exogenous) 1

The transitions between employment and unemployment SxE Employed Unemployed fxU CHAPTER 6 Unemployment slide 7

slide 7 Employed Unemployed s E f U 1

The steady state condition ■ Definition:the labor market is in steady state,or long-run equilibrium, if the unemployment rate is constant. -The steady-state condition is: s×E=fxU of employed people who of unemployed lose or leave people who find their jobs jobs CHAPTER 6 Unemployment slide 8

slide 8 § Definition: the labor market is in steady state, or long-run equilibrium, if the unemployment rate is constant. § The steady-state condition is: s E = f U # of employed people who lose or leave their jobs # of unemployed people who find jobs 1

Solving for the“equilibrium”U rate f×U SxE =sx(L-U) SxL-SxU Solve for U/L: (f+SxU=s×L s0, U 5 L s+f CHAPTER 6 Unemployment slide 9

slide 9 f U = s E = s (L –U ) = s L – s U Solve for U/L: (f + s)U = s L so, U s L s f   1