Macro 7
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Structural unemployment. The rise of smartphones has led to changes in the types of jobs demanded by the economy as certain industries decline and others grow, resulting in some workers lacking the skills needed for the new jobs being created. This causes structural unemployment.
Macro 7
- 2. Macroeconomics Lecture 7 Taxes and Unemployment
- 3. Questions?
- 4. Economics The study of how humans create value for one another
- 5. 1. Name three ways a government can raise money. 2. Name five different kinds of taxes. 3. In Pooleynesia every citizens has to pay a $500 tax each year. What kind of tax is this? 4. What are the two objectives in designing a tax system? 5. What are the two principles that are considered under fairness? 6. What are three kinds of income taxes? 7. What kind of tax is a flat tax? 8. What is the highest U.S. personal income tax rate? 9. Draw and explain the Laffer curve. 10. What does it mean when Dr. Pooley says, How you slice the pie determines the size of the pie. Tax, Sell, Borrow Income, Sales, Property, Excise, Estate, Fuel, Hotel, Sin Lump Sum Efficient and Equitable, Low Cost and Fair Benefits Principle and Ability-to-Pay Principle Proportionate, Progressive, Regressive Proportionate 39.6 percent
- 7. Tax Rate % $ Tax Revenue Laffer Curve 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Dropped Top Marginal Income Tax Rate from 70% to 28%
- 8. If you want more revenue Lower the rate
- 9. How you slice the pie Determines the size of the pie
- 11. Marginal Tax Rates Slice Economic Output Size
- 12. 1988 $352 billion 28% $100 billion Income above $200,000 Pie x 9.7 Taxes x 5.2 Smaller slice of a larger pie 1980 $36 billion 70% $19 billion
- 13. Assume you earn $70,000 in the U.S. What would your income taxes be? Use the following bracket table: Range Income Rate Tax $70,000 $0 - $9,275 $9,275 10% $927.50 $9,276 - $37,650 $28,375 15% $4,256.25 $37,651 - $91,150 $32,350 25% $8,087.50 Summary $70,000 19% $13,271.25
- 14. Who pays the taxes? 0% 25% 50% 75% 100% Top 1% Top 5% Top 10% Top 25% Top 50% Bottom 50% 3% 97% 87% 71% 60% 40%
- 15. $0 $0 $0 $0 $3 $71$10$7$5$4 $10 $10 $10 $10 $10 $10 $10 $10 $10 $10 $100
- 21. Unemployment
- 22. Key Terms labor force unemployment rate labor-force participation rate natural rate of unemployment cyclical unemployment discouraged workers frictional unemployment structural unemployment job search unemployment insurance union collective bargaining strike efficiency wages
- 24. Unemployment Who measures it? How is it measured?
- 25. Who Measures? Department of Labor Bureau of Labor Statistics
- 26. Two Surveys The Current Population Survey (CPS) "household survey" Sample of 60,000 households. The Current Employment Statistics Survey (CES): "payroll survey" sample of 160,000 businesses and government agencies that represent 400,000 individual employees.
- 27. Adults 16+ Everybody 320 100% 16+ 254 80% Under 16 66 20%
- 28. Adult Category 16+ 254 100% Not in Labor Force 94 37% In Labor Force 160 63%
- 29. Not in Labor Force not employed discouraged workers full-time student homemaker military retiree
- 31. Discouraged Worker People who would like to work but have given up looking for a job
- 32. Labor Force Adults 16+ who have jobs or are looking for jobs. Employed + Unemployed
- 33. Labor Force Participation Rate The percent of the Adult Population that is in the Labor Force
- 35. 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year 0N 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 Year 0 20 40 60 Shareofthecivilianlaborforce(%) Men Women
- 36. Labor Force Total 160 100% Employed 152.3 95.2% Unemployed 7.7 4.8%
- 37. Employed paid employees work in own business unpaid workers in family business full-time and part-time jobs but temporary absence
- 38. Unemployed not employed available tried to find a job in the last four weeks waiting to be recalled from layoff
- 40. millions % Population % Adults % Labor Force Population 320 100% Age under 16 66 20% Age 16+ 254 80% 100% Not in Labor Force 94 30% 37% In Labor Force 160 50% 63% 100% Employed 152.3 47.6% 60% 95.2% Unemployed 7.7 2.4% 3% 4.8%
- 41. U1: the percentage of labor force unemployed for 15 weeks or longer. U2: the percentage of labor force who lost jobs or completed temporary work. U3: the official unemployment rate that occurs when people are without jobs and they have actively looked for work within the past four weeks. U4: the individuals described in U3 plus "discouraged workers," those who have stopped looking for work because current economic conditions make them think that no work is available for them. U5: the individuals described in U4 plus other "marginally attached workers," "loosely attached workers," or those who "would like" and are able to work, but have not looked for work recently. U6: the individuals described in U5 plus part-time workers who want to work full-time, but cannot due to economic reasons, primarily underemployment. Six Measures of Unemployment
- 42. Problems Overstate - Above actual Cash workers Understate - Below actual Discouraged workers
- 43. Natural Rate of Unemployment The normal rate of unemployment around which the unemployment rate fluctuates
- 44. Cyclical Unemployment The deviation of unemployment from its natural rate
- 46. Frictional Unemployment Time to find a new job
- 48. Structural Unemployment Too many workers Change in Demand
- 51. What kind of unemployment is caused by smartphones?