April 2010 Archives

Lesson #12 - Unemployment (and Jobs)

Glimpses from the "Blogosphere"... (I hate that term, but it seemed lame to say, "Here are some selected entries from economics-related websites that I check out...)

Let's try it this way - I'll give you five minutes to browse the links at each of the sites below. After five minutes, we'll chat about what you find.

Greg Mankiw's Blog - He teaches Econ 10 at Harvard and was Chairman of George W. Bush's Council of Economic Advisers from 2003 to 2005.


Marginal Revolution
- Tyler Cowen is a Professor of Economics at George Mason, as is co-blogger Alex Tabarrok.


Predictably Irrational
- This is Dan Ariely's blog.


We'll take a look at the material on jobs that we didn't get to yesterday...

Unemployment
: This, in many ways, is sort of the flip side of what we did with inflation.


Defining "unemployment:
 The unemployment rate is the percentage of the U.S. labor force that is unemployed. It is calculated by dividing the number of unemployed individuals by the sum of the number of people unemployed and the number of people employed. An individual is counted as unemployed if the individual is over the age of 16 and is actively looking for a job, but cannot find one. Students, those individuals who choose to not work, and retirees are therefore not counted in the unemployment rate.


The Current State of Unemployment
: The most recent figures we have take us through December.  This is a lot of numbers, but just browse it for a couple minutes.
Here are the newest charts from the Bureau of Labor Statistics.

Questions to consider and discuss:

  • What surprises you (if anything) about the statistics and graphs above? What explanations do you have for the discrepancies?
  • In January 2002, a falling unemployment rate was accompanied by a significant fall in employment. How can the number of individuals employed fall and the unemployment rate fall at the same time?

Unemployment in your backyard (or anyone else's) ... You can go to the Bureau of Labor Statistics website and check the Local Area Unemployment Statistics for your city and/or state.

Answer these questions:

1. Is unemployment in our area higher, lower, or roughly the same as the national average? What about your favorite vacation spot? Your grandma's hometown?

2. What factors contribute to our area's unemployment rate? (Think about recent news...)

  • Which industries have expanded?
  • Which industries have contracted?

3. Will the recent changes affect you?

4. If avoiding inflation were your highest concern, where should you move? If you like the idea of unemployment, what cities would you recommend for your next move?


Unemployment Insurance:  Go to the website for the Minnesota WorkForce Center. Browse through the links and see what kinds of benefits are available in this state.
  • Do you think unemployment benefits are appropriate in Minnesota?
  • What changes, if any, would you make?
  • Do you think these benefits are a disincentive to work?

The Relationship between Inflation and Unemployment: The Phillips Curve - Economists have long claimed an inverse relationship exists between unemployment and inflation. This "Phillips Curve" quickly gets very technical, but you can see the basics at this link. Browse around for a bit.

HOMEWORK for tomorrow - Friday, April 23rd

Your Naked Economics Blog Entry #4 is posted (Chapters 6 and 7). It is due by class time on Friday.

Please try to read Chapter 8 in Naked Economics for tomorrow and Chapter 9 over the weekend.

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