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i have attached a file here for the assignment I want to get done

i have attached a file here for the assignment I want to get done
26 Online Macroeconomics Assignment 8 over Chapter 15 on Unemployment This week we will study the second big problem that can plague our macroeconomy, unemployment. Like the inflation problem we studied in Assignment 7, unemployment is a natural part of every economy. However, policymakers like to keep both inflation and unemployment as low as possible because too much of either causes people to suffer. When both are low this usually indicates a growing, healthy economy. In studying this chapter, you will learn how the unemployment rate is calculated and that some unemployment is inevitable, even in the healthiest economies. We will also consider the human and social costs of unemployment as well as the economic costs. Unemployment occurs when an adult who is looking for a job cannot find a job. When economists report that the United States has an unemployment rate of 3.8%, this does not mean that 4.8% of the United States’ population is unemployed. It means 3.8% of the non-institutionalized, non-military adult population that is looking for work cannot find work. In 15-1a on page 289 in Figure 1 Greg Mankiw shows how the unemployment rate is calculated, based on data from January of 2019. From the entire population we first exclude anyone under 16 years of age because 16 is how old one must be to be considered an adult for working purposes in the United States. This is why Figure 1 starts with an Adult Population of 258.2 million, rather than the total population in that year of about 328 million – we had 70 million kids under age 16. Next we exclude many people who are old enough to be in the labor force but for some reason are not choosing to participate in the labor force. These include folks like my parents, who are retired; or someone who chooses to be a full-time homemaker; or a student not working during the school year; or people in the armed services; or people in prisons or institutions; or the disabled who cannot work. Or people who have given up looking for work out of frustration because they cannot find work. In Mankiw’s figure, there are 95 million people Not in the labor force. By the way, the honorable members of our armed services are certainly providing valuable labor in our economy. However, the agency that calculates the unemployment rate – the Bureau of Labor Statistics – releases very detailed statistics on for example how many accountants are working in Kansas City this year. We used to count the military, but in the 1980s our military leaders decided it might not be a good idea make public this kind of detailed information on the composition of our armed services, so we don’t include them. If we counted them, the unemployment rate would be a little bit lower, like 3.4%. Note I am using the current unemployment rate of 3.6% for these notes, accurate as of 6/26/22, but Mankiw’s calculation using the numbers for Jan. 2019 will be 4.0%. After we subtract the adults not in the labor force, those people remaining who are people either working or looking for work, get what economists call the “Labor Force.” In Mankiw’s Figure 1 on page 289, this is 156.7 million Americans, or just about half of our entire population. Out of this number, in his figure, 6.5 million are looking for work but cannot find work. To get the unemployment rate, economists divide the number of unemployed by the labor force. So the unemployment rate in 2019 when Figure 1 was published was 6.5/163.2 or 4.0%.. At the start of the Corona downturn, our unemployment rate rose to 13.3% and had fallen to 4.8% when I revised these notes in October of 2021. Now it is down to 3.6% – a great improvement, and probably below the natural rate of unemployment every healthy economy has. You will learn more about that natural rate later in this assignment. Note the formula you will use on this homework to calculate the unemployment rate is just above Figure 1 on p. 289. Unemployment rate = number of unemployed/labor force x 100. Another way to think about this formula is the labor force is the number of (employed + the number of unemployed), so it can also be written as Unemployment rate = number of unemployed/(employed+unemployed) x 100. Since the number of unemployed in this picture is 6.5 million, and the labor force is 163.2 million, the unemployment rate in Jan. 2019 was 6.5/163.2 * 100 = 4.0%. Note this does not mean 4% of Americans were unemployed. It means 4% of the adult population looking for work could not find work. On the next page, Mankiw calculates another key measure of our nation’s labor market, the Labor Force Participation Rate: This is the labor force/the adult population * 100. For Mankiw’s picture, it is 163.2/258.2 * 100 = 63.2%. This means 63% of the adult population is choosing to participate in the labor force, either by working or by looking for work. In a sign our economy is still weakened by Corona, the current labor force participation rate is 62.3%. This is higher than it was last fall, but still below where we were before Corona. Our nation’s unemployment rate is calculated by the Bureau of Labor Statistics (BLS), which also calculates the inflation rate we studied in Assignment 7. The most recent unemployment report from the BLS was released on Friday, June 3rd, and reflects an extremely strong labor market in the United States. http://www.bls.gov/news.release/empsit.nr0.htm Here are a couple key paragraphs from that release: Total nonfarm payroll employment rose by 390,000 in May, and the unemployment rate remained at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in leisure and hospitality, in professional and business services, and in transportation and warehousing. Employment in retail trade declined. Household Survey Data In May, the unemployment rate was 3.6 percent for the third month in a row, and the number of unemployed persons was essentially unchanged at 6.0 million. These measures are little different from their values in February 2020 (3.5 percent and 5.7 million, respectively), prior to the coronavirus (COVID-19) pandemic. (See table A-1.) Among the major worker groups, the unemployment rate for Asians declined to 2.4 percent in May. The jobless rates for adult men (3.4 percent), adult women (3.4 percent), teenagers (10.4 percent), Whites (3.2 percent), Blacks (6.2 percent), and Hispanics (4.3 percent) showed little or no change over the month. (See tables A-1, A-2, and A-3.) There is also a paragraph about the current labor force participation rate: Household Survey Data In May, the unemployment rate was 3.6 percent for the third month in a row, and the number of unemployed persons was essentially unchanged at 6.0 million. These measures are little different from their values in February 2020 (3.5 percent and 5.7 million, respectively), prior to the coronavirus (COVID-19) pandemic. (See table A-1. This measure is up from its low of 51.3 percent in April 2020. Lots of comparisons to the pre-COVID and start of COVID economy there. Here is another, and quite possibly the most dramatic graph I will ever share with students. It was copied from the BLS website today. Note the peak Corona unemployment rate of almost 15%. See how unempllyment rises in recessions, then gradually falls afterwards? We had a recession in 2008-09 when the housing bubble burst, and unemployment rose from 4.8% to 10%. We then had long, steady improvement starting in the 3rd quarter of 2009 until right before COVID, when unemployment was down to 3.8%. Then the spring of 2020 happened. . . Here is a sentence I wrote back in October 2020 which has turned out to be true: Economists are currently expecting the rate to decline more rapidly than normal once we get a grip on the COVID problem. The current U.S. unemployment rate of 3.6% is currently lower than the Federal Reserve’s target of 4%. This means our labor market is currently running very hot, almost as if we are trying to produce at a point outside our production possibilities curve. It’s great just about everyone who wants to work can now get work, but such economies tend to have higher rates of inflation like we are now experiencing. Many students in my classes are currently being asked to work more hours than they actually want, and although this produces more income, it does cut into their study and leisure time. Here is a picture of the current labor force participation rate taken from the BLS website today. It shows we have still not recovered from the COVID decline: It is important to note that while the official unemployment rate stands at 3.8%, the actual unemployment rate is much higher. This is because three categories of workers are not counted in the official unemployment statistics: – discouraged workers, or unemployed workers who have given up looking for work. Remember the unemployment rate only counts people who are actively looking for work. – marginally attached workers. These are people not working nor looking for work, but who would work if asked to. – underemployed workers, or workers who would like to work full-time, but can only find part-time work. This is mostly workers who want more hours than their employer will give them. It also includes workers who have taken work that fails to utilize all of their skills. For a while in 1991, I was waiting tables at an upscale restaurant on the Plaza in Kansas City. It was fun waiting tables in a nice place and I learned a lot about fancy food and wine pairings, but with a BA in Economics and German and fluency in two foreign languages I was definitely under-employed. For me, however, at the time that was a lifestyle choice; the situation is sometimes very different for many Americans who have considerably more training and skills than they are able to apply in the work they can find. This loss of productivity represents not only a loss of economic opportunity for the individual worker, but also a loss of potential output for our nation. The BLS does try to count these people, but they are harder to count and so are not included in the official rate: https://www.bls.gov/news.release/empsit.t15.htm Note Mankiw has a version of that chart on p. 293 in 15-1a. So a broader measure of unemployment puts our current unemployment rate around 7.1%. The official U3 statistic of 3.3% is more accurate in the sense that those people are easier to count, but the broader U6 statistic of 7.1% is perhaps more descriptive of the actual level of unemployed labor resources in our country right now. Last fall when I updated these notes, these two numbers were 4.8% and 8.5% respectively, so our labor market continues to show improvement. One should never forget that these statistics represent an enormous amount of human suffering. The human costs of unemployment include increased crime, lower self-esteem, increased drug and alcohol abuse, increased spousal and child abuse, and increased radicalism. As you read about in the Ackerlof article in Assignment 5, people unemployed lose not just their incomes, but the feeling of self-worth that comes from productive employment. In Ackerlof’s phrasing: “A person without a job loses not just his income but often the sense that he is fulfilling the duties expected of him as a human being.” Another cost of massive, long-term unemployment is increased political radicalism. When economic systems are not providing meaningful employment for a large fraction of the population, increasing numbers of people begin to be attracted to extreme ideologies. Indeed, Karl Marx saw unemployment as one of the driving factors in what he predicted was an inevitable Communist revolution. In Assignment 7 I mentioned one ingredient in the recipe for Hitler was hyperinflation. A second key ingredient was a national unemployment rate in Germany in 1932 of 30%. And today, it is no coincidence that most of the terrorism in the world including the domestic white nationalist terrorism in the United States originates in communities in which the unemployment rate is extremely high, especially among young men. Contrast this with a partial solution to our racial and ethnic problem I see every day at JCCC. Every day across campus people of different nationalities and races and religions work together productively. The main reason why is that they woke up today employed (in their job as students, or people helping students), with a purpose to their lives that is moving them forward. When people become unemployed for a long time they often lose this purpose and this always encourages a few people to think irrationally about how the world works. And part of this irrationality is to find some vulnerable group Jews or immigrants to blame for their economic misery. I do want to be clear here that most people who lose their jobs because the economy turns down do not turn to substance abuse or start believing in the ridiculous QAnon conspiracy theory. Most want to go back to work and most do find work again fairly soon in normal economic times. Mankiw discusses this point on page 294 in 15-1c. But even for these people, the loss of a job due to circumstances beyond their control is a devastating experience. So unemployment has enormous human and political costs. There is, however, an important economic cost to consider: the true economic cost of unemployment is lost output that can never be regained, because time marches on. Suppose you decided to drop out of school and become a meth addict and turn yourself into a zombie with that horrible drug. And further suppose one year from now, you come to your senses and quit meth and get back in school and start moving forward with your life again. No matter how hard you try, that year is gone forever and nothing you can do will ever get it back. The same is true for folks presently unemployed. Someday most of them will find work again and they will get on with their lives, but the production they wanted to provide since they became unemployed but could not because they could not find work is lost forever. And that production is not just lost to them; it is lost for all of us. If you look in 15-1a at Figure 2 on page 291, you will see that the actual unemployment rate fluctuates around what economists call the “natural rate” of unemployment. Economists think the natural rate is around 4%. This means if our economy were in the best shape possible, we would have about 4% unemployment. Right now our economy is probably below that level, but we still want to increase the labor force participation rate, and of course the big problem we face right now is inflation. In every healthy economy, there is some unemployment that naturally occurs. Unemployment can be divided into 4 broad categories: 1) Frictional Unemployment, or unemployment due to job search: people who voluntarily leave one job to look for work in another profession are frictionally unemployed. Many college students are frictionally unemployed in their senior year or just after graduation. They have the skills for the job they want, and that job exists and is open for them, but they have not found that job yet. Every healthy economy will always have some of this kind of unemployment. 2) Structural unemployment, or unemployment due to technological change. Note: on page 295 in 15-1d, Mankiw defines this slightly differently: “unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one.” The internet, for example, has destroyed a lot of travel agent jobs. We used to phone travel agents when we needed airline tickets. Now we book them ourselves on the web. Although this was surely an unfortunate circumstance for travel agents, society as a whole is much better off because we have the internet. Technology is constantly destroying jobs like how Uber and Lyft are now destroying taxi jobs. Like frictional unemployment, this kind of unemployment is an inevitable party of a dynamic economy open to new technology. In fact, the best definition of technology in an economic sense is that technology is anything that helps us produce more output with fewer inputs, and of course one of those inputs is labor. Since technology is always improving, structural unemployment is part of every healthy economy. 3) Seasonal unemployment, or folks unemployed because the weather has changed. Many construction workers are unemployed during the winter because building may be halted until spring. A ski-lift operator might be seasonally unemployed in the summer. Demand for retail workers in the United States rises in the autumn but declines sharply after the holiday season. Note that Mankiw does not discuss seasonal unemployment in his text. These 3 kinds of unemployment make up the “natural rate” of unemployment, or the unemployment rate that will normally occur, even when the economy is healthy. This means when economists say we are enjoying “full employment” we are really still experiencing some unemployment, but only the “natural” kind. This also means that the United States in February, 2021 was probably about 1.5% above the natural rate because in Feb. 2021 our unemployment rate was 6.2%. This great chart from the BLS site kind of shows natural unemployment, as shown by the steady “Job leavers, Reentrants, and New entrants” lines. The dark blue and black spikes are the cyclical unemployment discussed below. The bottom red, grey, green, and light blue lines are the natural kind every healthy economy always has. Note the BLS is describing them differently, but taken together, those bottom 4 lines are made up of frictional, structural, and seasonal unemployment. I recall vividly when my first economics professor (and future mentor) Roger Trenary at K-State said: “If we wanted to we could eliminate all unemployment tomorrow. Let’s just outlaw farm machinery.” He wasn’t being serious, but instead was just conducting a thought experiment. This draconian policy would eliminate most of the natural unemployment every economy experiences, but doing so would definitely not improve most people’s standard of living. The fourth kind of unemployment is the main kind we fight with monetary and fiscal policies. 4) Cyclical unemployment, or unemployment due to `a decline in output caused by the business cycle. Last October the U.S. unemployment rate was 4.8%, and if the natural rate is 4.0%, then 0.8% of our unemployment was not natural, but instead cyclical. Although we have many programs and policies in place to help people find work (like the Career Center at JCCC

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