Question

nemployment End of Chapter Problem a. Long-term unemployment from a severe economic downturn causes unemployed workers to lose skills relative to those workers who remain employed, making it harder for the unemployed to find jobs even after economic conditions improve. Economists call this secondary impact of the initial unemployment natural unemployment. hysteresis. marginally attached. O structural unemployment. b. The long-term unemployed often find it more difficult to find jobs even after economic conditions improve due to lost job skills. The result is that ОО the cyclical unemployment rate will be higher. the equilibrium unemployment rate does not change. there is a decrease in frictional unemployment. the equilibrium unemployment rate will be higher. Hint CH Unemployment - End of Chapter Problem Your friend talks to you about how the company she works for is having a terrible year. She's terrified of getting laid off and the impact it would have on her family. What advice would you give her to prepare for the possibility of unemployment? Select all that apply. Your friend should keep an eye out for better opportunities while she is employed. build a "nest egg" in case she becomes unemployed. apply for unemployment compensation now.

Answer 1

Hysteresis is the term for the long-term impact on unemployment caused by an economic downturn that results in a loss of skills among workers. As a result, even when the economy recovers, the equilibrium unemployment rate may be higher due to structural problems in matching workers with jobs. Advisable steps to prepare for potential unemployment include looking for better job opportunities while employed, building a financial safety net, and understanding the application process for unemployment benefits.

Step-by-step explanation:

Long-term unemployment from a severe economic downturn can cause unemployed workers to lose skills, making it harder for them to find jobs even after the economy improves. This effect is known as hysteresis, which refers to the long-lasting impact from temporary causes. It is not considered 'natural unemployment' which refers to the baseline unemployment rate due to factors like frictional and structural unemployment, and it is different from being marginally attached or cyclical unemployment which fluctuates with the economy's performance.

The long-term unemployed may face a higher equilibrium unemployment rate because the skills mismatch, caused by extended periods of unemployment, can become a persistent structural issue. Therefore, when good economic conditions return, frictional unemployment decreases as people find jobs more easily, but structural issues might keep the equilibrium unemployment rate higher than before the downturn.

For someone concerned about potential unemployment, it's advisable to be proactive by continuously seeking better job opportunities, building a financial safety net or 'nest egg', and understanding the process of applying for unemployment benefits, should the need arise. However, it is important to note that unemployment compensation generally cannot be applied for until after one becomes unemployed.

Answer 2

Long-term unemployment can lead to a higher equilibrium unemployment rate due to hysteresis. Individuals concerned about potential unemployment should seek new opportunities, save money, and be ready to apply for benefits when necessary.

Step-by-step explanation:

The phenomenon where long-term unemployment from severe economic downturn leads to skill loss among unemployed workers, subsequently making it difficult for them to find jobs even after economic conditions improve, is called hysteresis. This is a secondary impact of the initial unemployment and contributes to the natural rate of unemployment. Consequently, the long-term unemployed often struggle to re-enter the workforce due to diminished skills, resulting in a scenario where the equilibrium unemployment rate will be higher. This is because the natural rate of unemployment includes frictional unemployment, which occurs as job seekers and employers look for good matches, and structural unemployment, which is a mismatch between the skills workers have and those needed by employers.

If someone is worried about being laid off, they should proactively search for other job opportunities, build a "nest egg" to tide them over if they become unemployed, and be prepared to apply for unemployment compensation should the need arise, but not before they are unemployed.