Today’s LEQ: What trade-offs related to labor are made when a country moves to privatization?

 When it comes to unemployment, there are opportunities and consequences associated with transitioning from command to market (trade-offs).  We’ll be comparing/contrasting the economic performance of each system.

 Unemployment – people actively looking for jobs cannot find work  Underemployment – workers unable to work as many hours as they want or have jobs that do not fully use their training and skills  Both affect levels of national income and economic growth

 Unemployment rates are ratios…  Numerator: the number of people who want to work and are actually looking for work but do not have jobs (unemployed)  Denominator: the number of people who want to work and are actively looking for or already have jobs (labor force)  Complete ACTIVITY 1

 Case 1: (Initially employed = 100, unemployed = 25, unemployment rate = 25/125 or 20%); (After the lottery, employed = 100, unemployed = 20, unemployment rate = 20/120 or 17%)  What conclusions can you draw from this example?

 Case 2: (Initially employed = 70, unemployed = 30, unemployment rate = 30/100 or 30%); (After the new government policy is adopted, employed = 100, unemployed = 0, unemployment rate = 0%)  What conclusions can you draw from this example?

 Write a paragraph summarizing a real world situation in which you observed worker productivity to be high, medium, or low. List changes in the process that might raise or lower productivity.  Be ready to share!

 What was life like in the former Soviet Union?

 Eight students are employees at the Central Store:  Security guard who monitors traffic and disruptions  Cashier who handles all the cash transactions  6 counter clerks who process orders for one of three food items  The rest of you are customers

 How many orders were processed?  Were all employees of the Central Store always busy? If not, who was less busy?  Was the store efficient?

 In command economies, full employment is sometimes achieved by hiring more workers than necessary which results in low productivity or underemployment.  Were some of the workers at the Central Market underemployed? How could you tell?  How will unemployment and underemployment affect the standards of living and income levels?

Unemployment tends to be higher in market economies, but in command economies there is likely to be more underemployment. Average production and income levels are lower in command economies than in industrial market economies. There is a level of protection from unemployment in the command economies that is not always provided to workers in a market economy.

 Answer the following questions on your warm up/exit ticket sheet: 1. Why was there little unemployment in command economies? 2. What are the trade-offs among the goals related to labor during transition?