AB 204 Unit 5: Topic 1: Discussion Post
Hello Professor and Class,
The different types of unemployment are cyclical, structural, and frictional. Cyclical unemployment is the deviation of unemployment from it’s natural rate. (Mankiw, 2015). Structural unemployment occurs when wages are set above the level that brings supply and demand into equilibrium. It occurs when the quantity of labor supplied exceeds the quantity demanded. (Mankiw, 2015). As for frictional unemployment, this occurs in the period in which workers are trying to match their their jobs.
Yes, it is possible for the number of employed workers to increase while the unemployment rate rises. For example, if an electronic car industry were to hire more technologically advanced employees to make repairs on the electronic cars, the increase in workers may rise as there is a higher demand. The mechanics that are not familiar with the technology of the electronic vehicles and don’t necessarily have the background of schooling, experience, and knowledge of electronic cars might get laid off or quit their job to seek other employment for “normal” vehicles. So, this is based on a supply and demand of the kind of work needed/wanted.
An increase in the minimum wage rate could result in a higher unemployment rate because, for example, if the government were to raise minimum wage to $15, and by law, McDonald’s has to honor that, they would need to cut more employees to compensate for the wages lost. Meaning that they would need to pay less employees more money, instead of more employees less money. This results in more unemployment for the minimum wage workers.
In my opinion, the labor market shows the supply and demand of jobs. If a minimum wage is set, then a price floor is put into place, and an increase in supply or demand for jobs is noted. I don’t think this relates to unemployment benefits because unemployment benefits occurs when someone reports to the government that they are not able to work for a certain reason, so therefore, they government grants them money based on what they could be making.
Mankiw, N. G. (2015). Principles of Macroeconomics, 7th Edition. [Kaplan]. Retrieved from https://kaplan.vitalsource.com/#/books/9781305156067/
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