1. Chapter 12 Unemployment Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

2. 12-2 Unemployment in the U.S. 1900 - 2007 0 5 10 15 20 25 30 1890190019101920193019401950196019701980199020002010 Year Unemployment Rate

3. 12-3 台灣失業率 (1078-2009)

4. 12-4 Unemployment Rates by Education Attainment, 1970-2007 0 2 4 6 8 10 12 14 16 19701980199020002010 Year Unemployment Rate High school dropouts College graduates High school graduates

5. 12-5 教育別失業率 (1978-2010)

6. 12-6 6 3 types of unemployment Frictional unemployment 摩擦性失業 Search activity of firms and workers due to heterogeneity. Matching process takes time. Structural unemployment 結構性失業 Reallocation of workers (lack of new skill) out of shrinking industries or depressed regions: matching takes a long time Cyclical unemployment 景氣性失業

7. 12-7 Structural Unemployment Structural unemployment arises when there is an imbalance between the supply of workers and the demand for workers or when unemployment arises because of a mismatch between worker skills and the skills needed by firms.

8. 12-8 產業結構變動對失業影響的兩個層面 第一層為當產業結構持續單向調整，成長的持續成長、衰退的持續衰退， 若勞動因知識技能的限制使其在部門間的移轉比例過低，則此種失業會持續發生，且 知識技能差異程度越大，移轉比例越低，造成的失業更多。 第二層則為產業結構調整的速度，如果產業結構調整速度很快， 但是勞動因人力資本累積不易而無法在短期調整，出現結構性失業的問題。 從三級產業結構的變化觀之 1980 年代中期以前農業部門佔 GDP 的比重逐年下降，取而代之的為工業及製造業部門， 農業部門所釋放的勞動人口可由部分低技術工業及製造業所吸收，因此整體失業率多 維持在 2% 上下； 1987 年以後，農業部門所佔比重仍持續下降，同時工業部門也同時出現下降趨勢，服 務業部門開始大幅度成長，但由於服務業部門對勞動的基礎知識要求較高，農業與工 業部門所釋放的勞動力無法有效轉入服務部門，因而產生大量結構性失業，也使長期 失業率出現逐年攀升的現象。 除了隨經濟發展產生的產業變遷外，台灣產業的生產結構也逐步從低技術人力密集產 業轉成高資本或高技術人力密集產業，新崛起的服務部門也由傳統型服務業轉變成專 業型服務業，因此使得勞動於部門間的移轉更加困難。 資料來源： http://rcted.ncu.edu.tw/digest_view.php?serial=179

9. 12-9 The Sectoral Shifts Hypothesis The sectoral shifts hypothesis argues that structural unemployment arises because the skills of workers cannot be easily transferred across sectors. The skills of workers laid off from declining industries have to be retooled before they can find jobs in growing industries.

10. 12-10 Unemployed Persons by Reason for Unemployment, 1967-2007

11. 12-11 Unemployment Duration Although most spells of unemployment do not last very long, most weeks of unemployment can be attributed to workers who are in very long spells.

12. 12-12 Unemployed Persons by Duration of Unemployment, 1948-2007

13. 12-13 The steady-state rate of unemployment The steady-state rate of unemployment depends on the transition probabilities among employment, unemployment, and the nonmarket sector.  E = h  U E= LF-U steady-state u = ?

14. 12-14 Flows Between Employment and Unemployment Employed (E workers) Unemployed (U Workers) Job Losers (  E) Job Finders (h  U) Suppose a person is either working or unemployed. At any point in time, some workers lose their jobs and unemployed workers find jobs. If the probability of losing a job equals, there are  E job losers. If the probability of finding a job equals h, there are h  U job finders.

15. 12-15 Dynamic Flows in the U.S. Labor Market, May 1993 Employed: 119.2 million Unemployed: 8.9 million Out of Labor Force: 65.2 million 1.8 million 2.0 million 1.5 million 1.7 million 3.2 million 3.0 million

16. 12-16 Job Search The asking wage makes the worker indifferent between continuing his search activities and accepting the job offer at hand. An increase in the benefits from search raises the asking wage and lengthens the duration of the unemployment spell. An increase in search costs reduces the asking wage and shortens the duration of the unemployment spell.

17. 12-17 The Wage Offer Distribution $5$8$22 $25 Frequency Wage The wage offer distribution gives the frequency distribution of potential job offers. A given worker can get a job paying anywhere from $5 to $25 per hour.

18. 12-18 Determination of the Asking Wage $5 $25 Wage Offer at Hand Dollars ww MC MR $10 $20 0 The marginal revenue curve gives the gain from an additional search. It is downward sloping because the better the offer at hand, the less there is to gain from an additional search. The marginal cost curve gives the cost of an additional search. It is upward sloping because the better the job offer at hand, the greater the opportunity cost of an additional search. The asking wage equates the marginal revenue and the marginal cost of search.

19. 12-19 Discount Rates, Unemployment Insurance, and the Asking Wage Wage Dollars w0w0 w0w0 w1w1 w1w1 MC MR 0 MR 1 Wage MC 0 MC 1 MR (a) Increase in discount rates (b) Increase in unemployment benefits

20. 12-20 Unemployment Insurance Unemployment insurance lengthens the duration of unemployment spells and increases the probability that workers are laid off temporarily.

21. 12-21 The Probability of Finding a New Job and UI Benefits

22. 12-22 The Intertemporal Substitution Hypothesis The intertemporal substitution hypothesis argues that the huge shifts in labor supply observed over the business cycle may be the result of workers reallocating their time so as to purchase leisure when it is cheap (that is, during recessions).

23. 12-23 Efficiency Wages and Unemployment Efficiency wages arise when it is difficult to monitor worker output. The above-market efficiency wage generates involuntary unemployment.

24. 12-24 Unemployment in Europe Table 12-3. Percentage of Unemployed Workers in Spells Lasting At Least 12 Months Country19902006 Belgium68.756.6 Denmark29.920.4 Germany46.857.2 France38.044.0 Ireland66.034.3 Italy69.852.9 Netherlands49.345.2 Spain54.029.5 United Kingdom34.422.1 United States5.510.0 Source: OECD Employment Outlook, Statistical Annex, Paris: OECD, 2007, Table G.

25. 12-25 Unemployment in Europe The combination of… –high unemployment insurance benefits –employment protection restrictions –wage rigidity probably accounts for high levels of unemployment observed in Europe in the 1980s and 1990s.

26. 12-26 Unemployment in Western Europe, 1960-2007 0 3 6 9 12 15 196019701980199020002010 Year Unemployment Rate US France Germany Italy UK