Economics 314 Coursebook, 2010

Jeffrey Parker

14

MODELS OF UNEMPLOYMENT
Chapter 14 Contents

A. Topics and Tools ............................................................................ 2 B. Defining Unemployment .................................................................. 3 The statistical definition ................................................................................................3 Problems with the statistical measures ............................................................................4 Natural and cyclical unemployment ...............................................................................6 C. Introduction to Theories of Unemployment........................................... 7 D. Minimum Wages and Unemployment ................................................. 10 A simple minimum-wage model .................................................................................. 10 Minimum-wage effects on skilled and unskilled labor ..................................................... 11 E. Unemployment Insurance and the Length of Job Search .......................... 13 A simple model of job search ........................................................................................ 13 Unemployment benefits and search duration ................................................................. 15 Optimal search duration ............................................................................................. 17 F. Unions and Unemployment .............................................................. 18 An economy-wide labor union ..................................................................................... 18 A two-sector model of unions and unemployment .......................................................... 19 G. Sectoral Shifts and Unemployment