by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Natural Rate of Unemployment? Cyclical unemployment explains why unemployment rises during a recession and falls during an economic expansion, but what explains the remaining level of unemployment even in good economic times? Why is the unemployment rate...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Relative Wage Coordination Argument? The relative wage coordination argument points out that even if most workers were hypothetically willing to see a decline in their own wages in bad economic times as long as everyone else also experiences such a...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Insider-Outsider Model? The insider-outsider model of the labor force, in simple terms, argues that those already working for firms are “insiders,” while new employees, at least for a time, are “outsiders.” A firm depends on its insiders to keep the...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Adverse Selection of Wage Cuts Argument? The adverse selection of wage cuts argument points out that if an employer reacts to poor business conditions by reducing wages for all workers, then the best workers, those with the best employment alternatives at...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Efficient Wage Theory? Efficiency wage theory argues that workers’ productivity depends on their pay, and so employers will often find it worthwhile to pay their employees somewhat more than market conditions might dictate. One reason is that...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Implicit Contract Theory of Wages? One argument is that even employees who are not union members often work under an implicit contract, which is that the employer will try to keep wages from falling when the economy is weak or the business is having...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What are the Issues with Measuring Unemployment? There are always complications in measuring the number of unemployed. For example, what about people who do not have jobs and would be available to work, but are discouraged by the lack of available jobs in their area...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the Establishment Payroll Survey? When the unemployment report comes out each month, the Bureau of Labor Statistics (BLS) also reports on the number of jobs created—which comes from the establishment payroll survey. The payroll survey is based on a survey of...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
What is the US Labor Force? The US Labor force is the number of employed plus the unemployed. What is Employed and Unemployed? Employed: currently working for pay Unemployed: Out of work and actively looking for a job Should we count everyone without a job as...
by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy
How can Fiscal Policy Can Affect Technology Development? Research and development (R&D) efforts are the lifeblood of new technology. Fiscal policy can encourage R&D using either direct spending or tax policy. Government could spend more on the R&D that it...
