Labor force growth is the great unknown in forecasting unemployment rates because people's reactions are very difficult to gauge. For example, during recessions, will people not bother looking for a job because of the difficulty in finding one, or will they look even harder because of the need for additional family income when wage increases are coming in below the inflation rate? a. Explain how labor force growth influences the unemployment rate. b. What impact will the two cited examples have on the measured unemployment rate? 

 

A12. And so we find ourselves in the strange situation in which employment is rising and at the same time unemployment is rising. Explain this phenomenon.

A14. In the U.S. or UK, economic recoveries put people back to work relatively quickly. But Germany is bogged down by high labor costs and other structural factors that discourage hiring. So the recent unemployment rate of 11.4 percent is not likely to fall by much in the near future. By what name would economists refer to this high German unemployment rate?

B3. Our jobless rate fell last month to its lowest level in three years. But if you think it's a sign that the economy is suddenly moving up, look again. Why wouldn't a fall in the unemployment rate be a sign that the economy is moving up? B4. Unemployment insurance may increase the incidence and length of jobless- ness and has certain inflationary attributes, but these drawbacks are outweighed by the positivesocial factors, according to a new study published by the Brook- ings Institution. a. How does unemployment insurance increase the incidence of joblessness? b. How does it increase the length of joblessness?

B8. Three percent real GDP growth is just about enough to keep the unemployment rate constant. Why wouldn't a zero growth rate keep unemployment constant?

B15. Federal government changes to the EI (employment insurance) program have caused the Atlantic region to suffer from two conflicting problems simultaneouslyhigh unemployment and a labor shortage. What EI changes could have caused this paradoxical situation?