1. Causes and Categories of Unemployment
Module 13
Causes and Categories of Unemployment

2. How might employment insurance affect unemployment?

3. Natural rate unemployment

4. Tswassen mills, target in canada

5. Frictional Unemployment

6. Frictional Unemployment
Unemployment due to the time workers spend in job search.
Examples: College student grads, starts work a month later, quit job at one company for a better one at another
Desirable – in order to get a better job you have to leave your previous one

7. Structural

8. Structural Unemployment
Unemployment that results when workers lack the skills required for the available jobs, or there are more people seeking jobs in a labour market than are available at a current wage.
Examples: bottle making machines replaced glass blowers, foreign outsourcing has led to many workers losing their jobs, loggers and sawmill workers lose jobs when gov’t restrictions on lumber are put in place

9. Minimum Wage

10. Use timber example.

11. Labour Unions

12. Efficiency Wages

13. Gov’t policies 22.7% - compared to Germany at 4.7% (april 2015)

14. Structural?

16. Natural Rate of Unemployment
NR = frictional + structural What else is there?

17. Cyclical Unemployment
Cyclical unemployment is the deviation from the natural rate of unemployment

18. The natural rate can change over time Demographics (aging population) , labour market institutions (fewer unions), technology (online job searching), gov’t policies (gov’t training programs, employment subsidies)

19. Explain the following:
Frictional unemployment always exists.
Frictional unemployment accounts for a larger share of unemployment when the unemployment rate is low.

20. Question
True or False: Collective bargaining has the same general effect on unemployment as minimum wage. Can you draw a diagram to illustrate the effect?
True, price floor

22. Question
Suppose Canada dramatically increases benefits for unemployed workers. Explain what will happen to the natural rate of unemployment.

23. What are the effects of this?
Do FR #2 in textbook.
Should we have basic income in British Columbia?