《宏观经济学》课程教学资源（英文版）Lecture 2-6 Unemployment

Worth: Mankiw Economics 5e CHAPTE R SIX Unemployment A man willing to work, and unable to find work, is perhaps the saddest sight that fortune's inequality exhibits under the sun Thomas Carlyle Unemployment is the macroeconomic problem that affects people most directly and severely. For most people, the loss of a job means a reduced living standard and psychological distress. It is no surprise that unemployment is a frequent topic of political debate and that politicians often claim that their proposed policies would help create jol Economists study unemployment to identify its causes and to help improve le public policies that affect the unemployed. Some of these policies, such as job-training programs, assist people in finding employment. Others, such as ul employment insurance, alleviate some of the hardships that the unemployed face Still other policies affect the prevalence of unemployment inadvertently. Laws mandating a high minimum wage, for instance, are widely thought to raise employment among the least skilled and experienced members of the labor force. By showing the effects of various policies, economists help policymakers valuate their options Our discussions of the labor market so far have ignored unemployment. In particular, the model of national income in Chapter 3 was built with the assump tion that the economy was always at full employment. In reality, of course, not everyone in the labor force has a job all the time: all free-market economies ex- perience some unemployment. Figure 6-1 shows the rate of unemployment-the percentage of the labor force unemployed--in the United States since 1948. Although the rate of unem ployment fluctuates from year to year, it never gets even close to zero. The aver- age is between 5 and 6 percent, meaning that about 1 out of every 18 people wanting a job does not have one. n this chapter we begin our study of unemployment by discussing why there is always some unemployment and what determines its level. We do not study what determines the year-to-year fluctuations in the rate of unemployment until Part iv of this book. where we examine short -run economic fluctuations Here we examine the determinants of the natural rate of unemployment-the av- erage rate of unemployment around which the economy fluctuates. The natural 155 User JoENA: Job EFFo1422: 6264_ ch06: Pg 155: 23949#/eps at 100s wed,Feb13,20029:364M

User JOEWA:Job EFF01422:6264_ch06:Pg 155:23949#/eps at 100% *23949* Wed, Feb 13, 2002 9:36 AM | 155 Unemployment is the macroeconomic problem that affects people most directly and severely. For most people, the loss of a job means a reduced living standard and psychological distress. It is no surprise that unemployment is a frequent topic of political debate and that politicians often claim that their proposed policies would help create jobs. Economists study unemployment to identify its causes and to help improve the public policies that affect the unemployed. Some of these policies, such as job-training programs, assist people in finding employment. Others, such as un￾employment insurance, alleviate some of the hardships that the unemployed face. Still other policies affect the prevalence of unemployment inadvertently. Laws mandating a high minimum wage, for instance, are widely thought to raise un￾employment among the least skilled and experienced members of the labor force. By showing the effects of various policies, economists help policymakers evaluate their options. Our discussions of the labor market so far have ignored unemployment. In particular, the model of national income in Chapter 3 was built with the assump￾tion that the economy was always at full employment. In reality, of course, not everyone in the labor force has a job all the time: all free-market economies ex￾perience some unemployment. Figure 6-1 shows the rate of unemployment—the percentage of the labor force unemployed—in the United States since 1948. Although the rate of unem￾ployment fluctuates from year to year, it never gets even close to zero.The aver￾age is between 5 and 6 percent, meaning that about 1 out of every 18 people wanting a job does not have one. In this chapter we begin our study of unemployment by discussing why there is always some unemployment and what determines its level. We do not study what determines the year-to-year fluctuations in the rate of unemployment until Part IV of this book, where we examine short-run economic fluctuations. Here we examine the determinants of the natural rate of unemployment—the av￾erage rate of unemployment around which the economy fluctuates.The natural Unemployment 6CHAPTER A man willing to work, and unable to find work, is perhaps the saddest sight that fortune’s inequality exhibits under the sun. — Thomas Carlyle SIX

Worth: Mankiw Economics 5e 156 PART I1 Classical Theory: The Economy in the Long Run figure 6-1 Percen 10 8 194519501955196019651970197519801985199019952000 Year The Unemployment Rate and the Natural Rate of Unemployment in the United States There always some unemp ployment. The natural rate of unemployment is the average level around which the unemployment rate fluctuates. (The natural rate of unemployment for any particular year is estimated here by averaging all the unemployment rates from ten years ear- lier to ten years later. Future unemployment rates are set at 5.5 percent. rate is the rate of unemployment toward which the economy gravitates in the long run, given all the labor-market imperfections that impede workers from in- 6-7 Job Loss, Job Finding, and the Natural Rate of Unemployment Every day some workers lose or quit their jobs, and some unemployed workers are hired. This perpetual ebb and flow determines the fraction of the labor force chat is unemployed. In this section we develop a model of labor-force dynamics that shows what determines the natural rate of unemployment. We start with some notation. Let L denote the labor force. e the number of nployed workers, and U the number of unemployed workers. Because every Robert E Hall, " A Theory of the Natural Rate of Unemployment and the Duration of Unem- ployment, "Joumal of Monetary Economics 5(April 1979): 153-169 User JOENA: Job EFF01422: 6264_ch06: Pg 156: 26227#/eps at 100s wed,Feb13,20029:364M

User JOEWA:Job EFF01422:6264_ch06:Pg 156:26227#/eps at 100% *26227* Wed, Feb 13, 2002 9:36 AM rate is the rate of unemployment toward which the economy gravitates in the long run, given all the labor-market imperfections that impede workers from in￾stantly finding jobs. 6-1 Job Loss, Job Finding, and the Natural Rate of Unemployment Every day some workers lose or quit their jobs, and some unemployed workers are hired.This perpetual ebb and flow determines the fraction of the labor force that is unemployed. In this section we develop a model of labor-force dynamics that shows what determines the natural rate of unemployment.1 We start with some notation. Let L denote the labor force, E the number of employed workers, and U the number of unemployed workers. Because every 156 | PART II Classical Theory: The Economy in the Long Run figure 6-1 Percent unemployed 10 8 6 4 2 0 Year 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 Unemployment rate Natural rate of unemployment The Unemployment Rate and the Natural Rate of Unemployment in the United States There is always some unemployment. The natural rate of unemployment is the average level around which the unemployment rate fluctuates. (The natural rate of unemployment for any particular year is estimated here by averaging all the unemployment rates from ten years ear￾lier to ten years later. Future unemployment rates are set at 5.5 percent.) 1 Robert E. Hall,“A Theory of the Natural Rate of Unemployment and the Duration of Unem￾ployment,’’ Journal of Monetary Economics 5 (April 1979): 153–169

Worth: Mankiw Economics 5e CHAPTER 6 Unemployment |15 worker is either employed or unemployed, the labor force is the sum of the em- ployed and the unemployed L=E+U In this notation, the rate of unemployment is U/L. To see what determines the unemployment rate, we assume that the labor force L is fixed and focus on the transition of individuals in the labor force be- tween employment and unemployment. This is illustrated in Figure 6-2. Let s de- note the rate of job separation, the fraction of employed individuals who lose their job each month. Let f denote the rate of job finding, the fraction of unem- ployed individuals who find a job each month. Together, the rate of job separa tion s and the rate of job finding f determine the rate of unemployment If the unemployment rate is neither rising nor falling--that is, if the labor mar- ket is in a steady state-then the number of people finding jobs must equal the number of people losing jobs. The number of people finding jobs is fU and the number of people losing jobs is sE, so we can write the steady-state condition as fU=SE. We can use this equation to find the steady-state unemployment rate. From an earlier equation, we know that E=L- U; that is, the number of employed equals the labor force minus the number of unemployed. If we substitute(L-U for E in the steady-state condition, we find fU=s(I Job Separation(s) Job Finding(f) The Transitions Between Employment and Unemployment In every period, a fraction s of the employed lose their jobs, and a fraction fof the unemployed find jobs. The rates of job separation and job finding determine the rate of unemployment. User JOENA: Job EFF01422: 6264_ch06: Pg 157: 26228#/eps at 100s wed,Feb13,20029:364M

User JOEWA:Job EFF01422:6264_ch06:Pg 157:26228#/eps at 100% *26228* Wed, Feb 13, 2002 9:36 AM worker is either employed or unemployed, the labor force is the sum of the em￾ployed and the unemployed: L = E + U. In this notation, the rate of unemployment is U/L. To see what determines the unemployment rate, we assume that the labor force L is fixed and focus on the transition of individuals in the labor force be￾tween employment and unemployment.This is illustrated in Figure 6-2. Let s de￾note the rate of job separation, the fraction of employed individuals who lose their job each month. Let f denote the rate of job finding, the fraction of unem￾ployed individuals who find a job each month.Together, the rate of job separa￾tion s and the rate of job finding f determine the rate of unemployment. If the unemployment rate is neither rising nor falling—that is, if the labor mar￾ket is in a steady state—then the number of people finding jobs must equal the number of people losing jobs.The number of people finding jobs is f U and the number of people losing jobs is sE, so we can write the steady-state condition as f U = sE. We can use this equation to find the steady-state unemployment rate. From an earlier equation, we know that E = L − U; that is, the number of employed equals the labor force minus the number of unemployed. If we substitute (L − U) for E in the steady-state condition, we find f U = s(L − U). CHAPTER 6 Unemployment | 157 figure 6-2 Job Separation (s) Job Finding (f ) Employed Unemployed The Transitions Between Employment and Unemployment In every period, a fraction s of the employed lose their jobs, and a fraction f of the unemployed find jobs. The rates of job separation and job finding determine the rate of unemployment

Worth: Mankiw Economics 5e 158 PART 11 Classical Theory: The Economy in the Long Run To get closer to solving for the unemployment rate, divide both sides of this equation by L to obtain Now we can solve for U/L to find U L This equation shows that the steady-state rate of unemployment U/L depends on the rates of job separation s and job finding f. The higher the rate of job ser aration, the higher the unemployment rate. The higher the rate of job finding, he lower the unemployment rate. Here's a numerical example. Suppose that 1 percent of the employed lose their jobs each month (s=0.01). This means that on average jobs last 100 months, or about 8 years. Suppose further that about 20 percent of the unemployed find a job each month (=0. 20), so that spells of unemployment last 5 months on aver- age. Then the steady-state rate of unemployment is U 0.01 L0.01+0.20 The rate of unemployment in this example is about 5 percent. This model of the natural rate of unemployment has an obvious but impor tant implication for public policy. Any policy aimed at lowering the natural rate of un employment must either reduce the rate of job separation or increase the rate of job finding Similarly, any policy that affects the rate of job separation or job finding also changes the natural rate of unemployment Although this model is useful in relating the unemployment rate to job separation and job finding, it fails to answer a central question: Why is there unemployment in the first place? If a person could always find a job quickly, then the rate of job finding would be very high and the rate of unemploy ment would be near zero. This model of the unemployment rate assumes that job finding is not instantaneous, but it fails to explain why. In the next two sections, we examine two underlying reasons for unemployment: job search and wage rigidity 6-2 Job Search and Frictional Unemployment One reason for unemployment is that it takes time to match workers and jobs. The equilibrium model of the aggregate labor market discussed in Chapter 3 as sumes that all workers and all jobs are identical, and therefore that all workers are User JOENA: Job EFF01422: 6264_ch06: Pg 158: 26229#/eps at 100sg wed,Feb13,20029:364M

User JOEWA:Job EFF01422:6264_ch06:Pg 158:26229#/eps at 100% *26229* Wed, Feb 13, 2002 9:36 AM To get closer to solving for the unemployment rate, divide both sides of this equation by L to obtain f = s(1 − ). Now we can solve for U/L to find = . This equation shows that the steady-state rate of unemployment U/L depends on the rates of job separation s and job finding f. The higher the rate of job sep￾aration, the higher the unemployment rate.The higher the rate of job finding, the lower the unemployment rate. Here’s a numerical example. Suppose that 1 percent of the employed lose their jobs each month (s = 0.01).This means that on average jobs last 100 months, or about 8 years. Suppose further that about 20 percent of the unemployed find a job each month ( f = 0.20), so that spells of unemployment last 5 months on aver￾age.Then the steady-state rate of unemployment is = = 0.0476. The rate of unemployment in this example is about 5 percent. This model of the natural rate of unemployment has an obvious but impor￾tant implication for public policy.Any policy aimed at lowering the natural rate of un￾employment must either reduce the rate of job separation or increase the rate of job finding. Similarly, any policy that affects the rate of job separation or job finding also changes the natural rate of unemployment. Although this model is useful in relating the unemployment rate to job separation and job finding, it fails to answer a central question: Why is there unemployment in the first place? If a person could always find a job quickly, then the rate of job finding would be very high and the rate of unemploy￾ment would be near zero.This model of the unemployment rate assumes that job finding is not instantaneous, but it fails to explain why. In the next two sections, we examine two underlying reasons for unemployment: job search and wage rigidity. 6-2 Job Search and Frictional Unemployment One reason for unemployment is that it takes time to match workers and jobs. The equilibrium model of the aggregate labor market discussed in Chapter 3 as￾sumes that all workers and all jobs are identical, and therefore that all workers are 0.01 0.01 + 0.20 U L s s + f U L U L U L 158 | PART II Classical Theory: The Economy in the Long Run

Worth: Mankiw Economics 5e CHAPTER 6 Unemployment 159 equally well suited for all jobs. If this were true and the labor market were in would immediately find a new job at the market wage ment: a laid-off worker Im, then a job loss would not cause unemploy In fact, workers have different preferences and abilities, and jobs have dif- ferent attributes. Furthermore, the flow of information about job candidates and job vacancies is imperfect, and the geographic mobility of workers is not instantaneous. For all these reasons, searching for an appropriate job takes time and effort, and this tends to reduce the rate of job finding. Indeed, because different jobs require different skills and pay different wages, unemployed workers may not accept the first job offer they receive. The unemployment aused by the time it takes workers to search for a job is called frictional unemployment Some frictional unemployment is inevitable in a changing economy. For many reasons, the types of goods that firms and households demand vary over time. As the demand for goods shifts, so does the demand for the labor that produces those goods. The invention of the personal computer, for example, reduced the demand for typewriters and, as a result, for labor by typewriter manufacturers. At the same time. it increased the demand for labor in the elec- tronics industry. Similarly, because different regions produce different goods, he demand for labor may be rising in one part of the country and falling in another. A decline in the price of oil may cause the demand for labor to fall in oil-producing states such as Texas, but because cheap oil makes driving less expensive, it increases the demand for labor in auto-producing states such as Michigan. Economists call a change in the composition of demand among in dustries or regions a sectoral shift. Because sectoral shifts are always occur ring, and because it takes time for workers to change sectors, there is always frictional unemployment. Sectoral shifts are not the only cause of job separation and frictional unem- ployment. In addition, workers find themselves unexpectedly out of work when their firms fail, when their job performance is deemed unacceptable, or when their particular skills are no longer needed. Workers also may quit their jobs to hange careers or to move to different parts of the country. As long as the supply and demand for labor among firms is changing, frictional unemployment is un- avoidable Public Policy and Frictional Unemployment Many public policies seek to decrease the natural rate of unemployment by reducing frictional unemployment. Government employment agencies dis- seminate information about job vacancies in order to match jobs and workers more efficiently. Publicly funded retraining programs are designed to ease the transition of workers from declining to growing industries. If these programs Icceed at increasing the rate of job finding, they decrease the natural rate of une ent Other government programs inadvertently increase the amount of fric- tional unemployment. One of these is unemployment insurance. Under User JOENA: Job EFF01422: 6264_ch06: Pg 159: 26230 #/eps at 100s wed,Feb13,20029:364M

User JOEWA:Job EFF01422:6264_ch06:Pg 159:26230#/eps at 100% *26230* Wed, Feb 13, 2002 9:36 AM equally well suited for all jobs. If this were true and the labor market were in equilibrium, then a job loss would not cause unemployment: a laid-off worker would immediately find a new job at the market wage. In fact, workers have different preferences and abilities, and jobs have dif￾ferent attributes. Furthermore, the flow of information about job candidates and job vacancies is imperfect, and the geographic mobility of workers is not instantaneous. For all these reasons, searching for an appropriate job takes time and effort, and this tends to reduce the rate of job finding. Indeed, because different jobs require different skills and pay different wages, unemployed workers may not accept the first job offer they receive. The unemployment caused by the time it takes workers to search for a job is called frictional unemployment. Some frictional unemployment is inevitable in a changing economy. For many reasons, the types of goods that firms and households demand vary over time. As the demand for goods shifts, so does the demand for the labor that produces those goods. The invention of the personal computer, for example, reduced the demand for typewriters and, as a result, for labor by typewriter manufacturers.At the same time, it increased the demand for labor in the elec￾tronics industry. Similarly, because different regions produce different goods, the demand for labor may be rising in one part of the country and falling in another. A decline in the price of oil may cause the demand for labor to fall in oil-producing states such as Texas, but because cheap oil makes driving less expensive, it increases the demand for labor in auto-producing states such as Michigan. Economists call a change in the composition of demand among in￾dustries or regions a sectoral shift. Because sectoral shifts are always occur￾ring, and because it takes time for workers to change sectors, there is always frictional unemployment. Sectoral shifts are not the only cause of job separation and frictional unem￾ployment. In addition, workers find themselves unexpectedly out of work when their firms fail, when their job performance is deemed unacceptable, or when their particular skills are no longer needed.Workers also may quit their jobs to change careers or to move to different parts of the country. As long as the supply and demand for labor among firms is changing, frictional unemployment is un￾avoidable. Public Policy and Frictional Unemployment Many public policies seek to decrease the natural rate of unemployment by reducing frictional unemployment. Government employment agencies dis￾seminate information about job vacancies in order to match jobs and workers more efficiently. Publicly funded retraining programs are designed to ease the transition of workers from declining to growing industries. If these programs succeed at increasing the rate of job finding, they decrease the natural rate of unemployment. Other government programs inadvertently increase the amount of fric￾tional unemployment. One of these is unemployment insurance. Under CHAPTER 6 Unemployment | 159