UNEMPLOYMENT AND JOB SEARCH 1 1 Hwei-Lin Chuang, Ph.D. 2012/06/06

OUTLINE Unemployment Types of Unemployment and Their Causes Job Search Inflation and Unemployment

失業率-按年齡分 單位 ： % 資料來源：主計處人力資源調查報告 失 業 率 96 97 98 99 100 15 ~ 24歲 項目別 失 業 率 96 97 98 99 100 全部 男性 女性 總　　計 3.91 4.05 3.72 4.14 4.39 3.83 5.85 6.53 4.96 5.21 5.80 4.45 4.71 3.96 15 ~ 24歲 10.65 11.41 10.04 11.81 12.45 11.28 14.49 15.66 13.56 13.09 13.60 12.66 12.47 12.61 12.35 15 ~ 19歲 11.13 10.84 11.43 11.42 11.58 13.55 13.38 13.71 10.93 10.97 10.89 11.22 10.68 11.82 20 ~ 24歲 10.56 11.54 9.82 11.89 12.72 11.23 14.67 16.15 13.53 13.51 14.20 12.96 12.71 13.04 12.44 25 ~ 44歲 3.86 4.19 3.45 4.02 4.47 3.47 5.93 6.95 4.70 5.35 6.23 4.30 4.46 5.03 3.80 25 ~ 29歲 5.87 5.15 6.38 7.19 5.53 8.77 10.26 8.15 9.40 6.86 7.11 7.86 6.36 30 ~ 34歲 3.87 4.01 3.70 3.89 4.25 5.82 6.76 4.69 5.19 6.04 4.17 4.32 4.67 3.90 35 ~ 39歲 2.76 3.09 2.31 2.97 3.39 2.43 4.64 5.52 3.54 4.10 4.76 3.28 3.32 4.13 2.32 40 ~ 44歲 2.81 3.21 2.26 2.63 3.10 1.99 4.23 5.31 2.80 3.77 4.79 2.44 3.02 3.67 2.18 45 ~ 64歲 2.24 2.56 1.69 2.54 2.95 1.85 2.64 4.16 2.16 3.19 1.75 45 ~ 49歲 2.47 2.88 3.23 2.07 4.27 5.07 3.12 4.88 2.50 2.99 3.65 50 ~ 54歲 2.33 2.67 1.74 2.65 3.17 1.80 5.02 2.70 3.50 4.26 2.29 2.66 3.22 1.78 55 ~ 59歲 1.95 2.15 1.54 2.60 4.43 1.82 3.06 1.60 3.05 1.31 60 ~ 64歲 1.29 1.59 0.57 1.38 1.68 0.67 2.00 2.30 1.50 1.73 0.99 1.57 1.83 0.94 65歲及以上 0.16 0.15 0.17 0.22 0.07 0.13 0.18 - 0.19 0.09 資料來源：主計處人力資源調查報告

1. Unemployment The concept of unemployment is somewhat ambiguous since in theory virtually anyone would be willing to be employed in return for a generous enough compensation package. →Economists define unemployment in terms of an individual’s willingness to be employed at some prevailing market wage. u（unemployment rate）=U/L Government statistic: U (temporary layoff waiting to be recalled , actively search for work in the previous week or month )

Note: Limitations of unemployment rate data →For a number of reasons, they do not necessarily provide an accurate reflection of the economic hardship that members of a group are suffering.

Individuals who are not actively searching for work, including those who search unsuccessfully and then gave up, are not counted among the unemployed. e.g., discouraged worker. Unemployment statistics tell us nothing about the earnings levels of those who are employed. A substantial fraction of the unemployed come from families in which other earners are present and the unemployed are often not the primary source of their family support. Unemployed receive some income support such as government unemployment compensation. Unemployment rate data tell us little about the fraction of the population that is employed.

2. Types of Unemployment and Their Causes (1)Frictional Unemployment D0: Labor Demand S0 : Labor Supply (W0, E0): Equilibrium Wage and Employment Level W Employment S0 D0 E0 W0 Even in a market-equilibrium or full-employment situation there will still be some frictional unemployment, because some people will be “between jobs”. Frictional unemployment arises because labor markets are inherently dynamic, because information flows are imperfect, and because it takes time for unemployed workers and employers with job vacancies to find each other.

(2) Structural Unemployment Structural unemployment arises when changes in the pattern of labor demand cause a mismatch between the skills demanded and supplied in a given area or cause an imbalance between the supplies and demands for workers across areas. W W S0B S0A W1B W0A W0B D0A D0B D1A D1B E0B E1B E1A E0A Employment Employment →Unemployment of E0A – E1A workers would be created in the short run.

Flows Between Employment and Unemployment Employed (E workers) Unemployed (U Workers) Job Losers (  E) Job Finders (h  U) Suppose a person is either working or unemployed. At any point in time, some workers lose their jobs and unemployed workers find jobs. If the probability of losing a job equals , there are   E job losers. If the probability of finding a job equals h, there are h  U job finders.

If wages were completely flexible and if costs of occupational or geographic mobility were low, market adjustments would quickly eliminate this type of unemployment. Note: It has been argued that structural unemployment may also arise if some employers are paying above market-clearing (or efficiency) wages to reduce employee turnover and/or shirking and to increase productivity.

(3) Demand-Deficient Unemployment Demand-deficient unemployment occurs when a decline in aggregate demand in the output market causes the aggregate demand for labor to decline in the face of downward inflexibility in real wages. If real wages are inflexible downward, E fall to E1, and E0 – E1 workers will become unemployed. →Flows into unemployment increase while flows into employed decline. W W0 W2 E S0 D0 D1 E0 E2 E1 One appropriate government response to demand-deficient unemployment is to pursue macroeconomic policies to increase aggregate demand; these policies include increasing the level of government spending, reducing taxes, and increasing the rate of growth of the money supply.

Why employers respond to a cyclical decline in demand by temporarily laying off some of their work force rather than reducing real wages. Rigid money wage: employers are not free to unilaterally cut money wages because of the presence of unions. The asymmetry of the information between employers and employees makes layoffs the preferred policy. In the presence of investments in firm-specific human capital, layoffs affect only the least-experienced workers, the workers in whom the firm has invested the smallest amount of resources. →The firm will find choosing the layoff strategy a more profitable alternative. A system of layoffs in which the newest employees are laid off first provides an implicit contract (a guarantee or form of insurance to experienced workers) that they will be immune to all but the severest declines in demand. →They will be willing to pay for the stability by accepting lower wages.

(4) Seasonal Unemployment Seasonal unemployment is similar to demand-deficient unemployment in that it is induced by fluctuations in the demand for labor. However, the fluctuations can be regularly anticipated and follow a systematic pattern over the course of a year. e.g., Agricultural employee To attract workers to such seasonal industries, firm will have to pay workers higher wages to compensate them for being periodically unemployed. →The existence of compensating wage differentials makes it difficult to evaluate whether this type of unemployment is voluntary or involuntary in nature.

3. Job Search Many theories claim to explain the existence and persistence of unemployment in competitive markets. Any given worker can choose from among many different job offers. Because it takes time to learn about the opportunities provided by different employers, search activities prolong the duration of the unemployment spell. The worker, however, is willing to endure a longer unemployment spell because it might lead to a higher-paying job. In fact, search unemployment is a human capital investment in information.

(1) The Wage Offer Distribution To simplify the analysis, we assume that search activities are conducted only by unemployed workers. The wage offer distribution gives the frequency distribution describing the various offers available to a particular unemployed worker in the labor market. The unemployed worker knows the shape of the wage offer distribution. Search activities, however, are costly. Each time the worker applies for a new job, he incurs transportation and other types of search costs. Moreover, he is also forgoing earnings: He could have been working at a lower-paying job. The worker’s economic trade-offs are clear: The longer he searches, the more likely he will get a high wage offer; the longer he searches, however, the more it costs to find that job.

(2) The Asking Wage The asking wage is the threshold wage that determines if the unemployed worker accepts or rejects incoming job offers. There is a clear link between a worker’s asking wage and the length of the unemployment spell the worker will experience. Workers who have low asking wages will find acceptable jobs very quickly and the unemployment spell will be short. Workers with high asking wages will take a long time to find an acceptable job and the unemployment spell will be very long.

The marginal revenue curve gives the gain from an additional search The marginal revenue curve gives the gain from an additional search. It is downward sloping because the better the offer at hand, the less there is to gain from an additional search. The marginal cost curve gives the cost of an additional search. It is upward sloping because the better the job offer at hand, the greater the opportunity cost of an additional search. The asking wage equates the marginal revenue and the marginal cost of search. Dollars MR MC Wage Offer at Hand The Determination of the Asking Wage $5 $10 $20 $25

(3) DETERMINANTS OF THE ASKING WAGE The worker’s asking wage will respond to changes in the benefits and costs of search activities. Workers with high discount rates are present- oriented, and hence perceive the future benefits from search to be low. A major component of search costs is the opportunity cost resulting from rejecting a job offer and continuing the search. The unemployment insurance (UI) system, compensates workers who are unemployed and who are actively engaging in search activities. Unemployment insurance benefits, therefore, reduce the marginal cost of search.

失業者找尋工作方法-按年齡分 單位 ： % 找 尋 工 作 方 法 Item 託親友師長介紹 向私立就業服務機構登記求職 應徵廣告、招貼 年 找 尋 工 作 方 法 Item 託親友師長介紹 向私立就業服務機構登記求職 應徵廣告、招貼 年 年齡 95 97 100 15 ~ 24歲 57.36 52.63 55.68 20.46 28.54 29.39 74.73 62.94 63.54 15 ~ 19歲 75.32 77.62 44.30 8.84 19.73 25.93 80.50 66.98 68.02 20 ~ 24歲 54.68 48.36 57.50 22.20 30.05 29.94 73.87 62.25 62.83 25 ~ 44歲 60.09 54.05 51.39 26.28 32.91 39.17 69.63 67.67 68.99 25 ~ 29歲 59.02 46.90 47.38 29.80 35.13 40.13 71.69 65.45 64.25 30 ~ 34歲 62.02 59.86 49.21 22.92 33.43 35.54 70.24 70.00 69.40 35 ~ 39歲 60.41 57.52 56.50 19.14 29.19 45.16 67.40 73.20 77.69 40 ~ 44歲 59.50 60.88 60.26 30.21 30.24 36.15 65.37 63.96 71.78 45歲及以上 57.24 66.18 62.52 15.12 27.92 29.38 50.24 61.51 57.29 45 ~ 49歲 51.53 66.02 64.79 8.92 34.47 27.58 45.95 66.33 66.78 50歲及以上 61.57 19.82 21.58 31.05 53.50 56.85 48.45 資料來源：主計處人力資源調查報告

失業者找尋工作方法-按年齡分(續) 單位 ： % 找 尋 工 作 方 法 (續) Item 向公立就業服務機構登記求職 參加政府考試分發 找 尋 工 作 方 法 (續) Item 向公立就業服務機構登記求職 參加政府考試分發 其 他 年 年齡 95 97 100 15 ~ 24歲 20.77 28.70 21.47 6.74 9.87 18.17 1.20 - 15 ~ 19歲 15.55 38.25 29.79 20 ~ 24歲 21.55 27.07 20.14 7.74 11.56 21.07 1.38 25 ~ 44歲 22.20 23.73 26.47 8.31 9.34 13.05 4.07 0.44 0.76 25 ~ 29歲 21.34 23.15 23.78 12.09 14.51 20.38 4.41 1.02 1.32 30 ~ 34歲 24.37 21.16 20.74 9.43 10.52 13.19 1.52 0.21 35 ~ 39歲 22.02 22.89 32.28 4.63 2.68 5.59 6.71 0.45 40 ~ 44歲 21.17 30.23 36.82 0.87 1.14 4.37 45歲及以上 33.90 33.47 38.42 1.21 3.56 1.71 0.59 45 ~ 49歲 30.52 31.33 34.41 2.51 7.09 2.53 50歲及以上 36.45 35.54 42.16 0.88 0.92 0.43 失業者找尋工作方法-按年齡分(續) 資料來源：主計處人力資源調查報告

失業者找尋工作方法-按教育程度分 單位 ： % 找 尋 工 作 方 法 Item 託親友師長介紹 向私立就業服務機構登記求職 應徵廣告、招貼 找 尋 工 作 方 法 Item 託親友師長介紹 向私立就業服務機構登記求職 應徵廣告、招貼 年 教育程度 95 97 100 國中及以下 69.12 67.33 70.99 15.56 21.36 25.39 59.22 65.54 63.99 國小及以下 59.31 60.59 70.87 8.42 20.64 29.28 40.73 59.50 39.57 國中 72.73 70.26 71.03 18.19 21.67 24.26 66.02 68.17 71.06 高中（職） 64.18 65.01 59.65 22.63 31.59 33.98 76.25 72.52 71.75 高中 68.00 66.11 58.03 20.81 36.30 28.62 68.90 70.79 72.17 高職 63.06 64.64 60.15 23.17 29.98 35.60 78.41 73.12 71.62 大專及以上 46.67 41.17 43.99 27.60 35.70 39.84 62.80 58.66 61.03 專科 54.15 50.92 54.18 27.19 39.82 45.04 70.84 67.16 67.35 大學及以上 40.61 35.82 39.66 27.93 33.44 37.64 56.29 53.99 58.35 資料來源：主計處人力資源調查報告

失業者找尋工作方法-按教育程度分(續) 單位 ： % 找 尋 工 作 方 法 (續) Item 向公立就業服務機構登記求職 參加政府考試分發 找 尋 工 作 方 法 (續) Item 向公立就業服務機構登記求職 參加政府考試分發 其 他 年 教育程度 95 97 100 國中及以下 24.81 31.42 26.25 - 0.43 3.34 0.65 國小及以下 35.99 45.41 39.78 國中 20.70 25.36 22.32 0.56 4.57 0.84 高中（職） 22.73 23.32 33.05 1.18 2.09 1.51 2.02 0.62 0.51 高中 17.35 23.74 25.42 2.03 1.78 1.47 0.09 1.67 高職 24.32 23.17 35.36 0.93 2.19 1.52 2.58 0.83 0.15 大專及以上 24.80 27.29 23.97 16.19 17.31 24.60 4.60 0.85 0.57 專科 27.23 25.78 30.12 3.58 7.03 6.67 5.31 1.68 大學及以上 22.83 28.12 21.35 26.39 22.95 32.22 4.02 1.31 0.10 資料來源：主計處人力資源調查報告

失業者失業期間-按年齡分 失 業 期 間 年齡 單位 ： % Item 1 ~ 2 週 3 ~ 4 週 5 ~ 13 週 年 95 97 失 業 期 間 Item 1 ~ 2 週 3 ~ 4 週 5 ~ 13 週 年 年齡 95 97 100 15 ~ 24歲 11.46 13.18 10.32 14.39 12.76 12.10 29.03 32.25 27.48 15 ~ 19歲 22.17 29.44 19.33 6.99 18.04 14.14 35.88 28.69 27.89 20 ~ 24歲 9.88 10.43 8.90 15.48 11.87 11.77 28.02 32.85 27.42 25 ~ 44歲 7.27 8.54 7.00 13.63 8.79 14.61 23.41 24.86 22.57 25 ~ 29歲 6.12 8.36 7.91 15.76 17.25 25.32 26.60 22.61 30 ~ 34歲 5.85 8.23 6.52 12.92 12.90 25.39 23.76 18.60 35 ~ 39歲 10.98 5.68 6.87 14.50 6.77 11.79 22.49 25.50 28.47 40 ~ 44歲 8.46 12.59 5.54 7.77 7.25 13.50 15.82 21.14 22.71 45歲及以上 11.44 11.53 8.55 9.90 13.05 10.78 17.10 25.16 20.47 45 ~ 49歲 14.56 10.53 8.48 8.42 4.68 7.13 15.36 28.29 21.59 50歲及以上 8.95 12.46 8.62 11.08 20.70 13.85 18.49 22.30 19.54 失業者失業期間-按年齡分 資料來源：主計處人力資源調查報告

失業者失業期間-按年齡分(續) 單位 ： % 失 業 期 間 (續) Item 年 年齡 95 97 100 45歲及以上 50歲及以上 失 業 期 間 (續) Item 14 ～ 26 週 27 ～52 週 53 週以上 年 年齡 95 97 100 15 ~ 24歲 21.34 14.11 16.45 13.77 22.78 25.17 10.00 4.92 8.48 15 ~ 19歲 17.00 8.66 11.73 17.96 11.47 26.92 - 3.69 20 ~ 24歲 21.98 15.03 17.19 13.15 24.70 24.89 11.48 5.12 9.83 25 ~ 44歲 24.98 21.16 18.24 17.50 18.74 18.02 13.20 17.91 19.57 25 ~ 29歲 26.72 23.43 16.38 17.15 19.46 18.08 8.94 11.72 17.76 30 ~ 34歲 23.92 16.80 20.06 17.73 18.54 20.27 14.18 24.29 21.65 35 ~ 39歲 21.26 18.47 16.53 15.14 18.87 17.12 15.63 24.72 19.22 40 ~ 44歲 26.29 24.53 21.89 20.95 16.95 15.10 20.70 17.54 21.25 45歲及以上 20.82 22.83 19.76 16.09 19.68 20.15 13.35 17.69 45 ~ 49歲 26.98 20.58 25.89 18.77 20.32 24.32 15.91 15.61 12.60 50歲及以上 17.38 21.04 20.25 20.56 12.22 15.78 23.54 11.28 21.97 資料來源：主計處人力資源調查報告

失業者失業期間-按教育程度分 單位 ： % 失 業 期 間 Item 1 ~ 2 週 3 ~ 4週 5 ~ 13 週 年 教育程度 95 失 業 期 間 Item 1 ~ 2 週 3 ~ 4週 5 ~ 13 週 年 教育程度 95 97 100 國中及以下 8.71 12.95 11.33 12.09 8.95 14.44 20.07 26.38 18.35 國小及以下 12.36 10.85 15.35 12.10 9.95 16.33 17.91 29.30 17.53 國中 7.37 13.85 9.91 12.08 8.52 13.77 20.86 25.13 18.64 高中（職） 12.33 8.48 12.54 10.11 15.04 25.37 25.21 26.66 高中 6.95 7.90 5.95 10.93 12.37 32.45 27.09 21.86 高職 10.80 9.24 12.89 9.83 15.84 23.35 24.57 28.11 大專及以上 8.36 6.49 6.25 14.40 11.88 11.36 23.85 28.04 22.24 專科 11.42 3.94 8.63 16.04 14.78 13.43 26.44 31.20 23.89 大學及以上 5.87 5.24 13.07 10.28 10.49 21.76 26.31 21.54 資料來源：主計處人力資源調查報告

失業者失業期間-按教育程度分(續) 單位 ： % 失 業 期 間 (續) Item 14 ～ 26 週 27 ～52 週 53 週以上 年 失 業 期 間 (續) Item 14 ～ 26 週 27 ～52 週 53 週以上 年 教育程度 95 97 100 國中及以下 26.38 22.01 23.32 16.71 14.02 15.11 16.04 15.70 17.46 國小及以下 18.01 15.59 24.28 22.27 15.19 14.63 17.36 19.13 11.88 國中 29.46 24.76 22.99 14.66 13.52 15.27 15.56 14.23 19.41 高中（職） 24.66 19.83 15.58 15.26 17.70 17.15 12.22 14.82 17.10 高中 14.05 20.09 17.89 21.44 19.01 17.11 13.78 14.98 24.83 高職 27.69 19.74 14.88 13.49 17.25 17.16 11.78 14.76 14.77 大專及以上 20.23 17.67 19.63 19.21 23.55 24.07 13.95 12.37 16.44 專科 17.71 12.10 19.47 15.92 22.96 16.88 12.46 15.02 17.69 大學及以上 22.26 20.74 19.70 21.88 23.87 27.11 15.16 10.91 15.91 資料來源：主計處人力資源調查報告

失業者平均失業期間-按年齡分 失 業 期 間 年齡 單位 ： % 年 93 94 95 96 97 98 99 100 15 ~ 24歲 失 業 期 間 年 年齡 93 94 95 96 97 98 99 100 15 ~ 24歲 20.99 23.40 19.89 18.36 18.95 26.06 25.97 23.16 15 ~ 19歲 23.51 25.27 13.44 10.12 13.61 23.28 18.91 20 ~ 24歲 20.47 23.06 20.85 19.57 19.85 27.13 26.42 23.83 25 ~ 44歲 30.98 30.84 26.00 25.54 27.33 27.72 32.13 29.50 25 ~ 29歲 29.68 27.74 22.72 26.41 23.48 29.77 30.76 27.77 30 ~ 34歲 29.52 29.39 24.07 31.31 25.92 34.24 31.25 35 ~ 39歲 33.86 36.79 26.94 25.50 26.13 35.66 30.26 40 ~ 44歲 32.32 32.95 34.14 27.34 27.59 27.88 30.35 45歲及以上 35.63 33.28 30.69 29.37 24.00 27.60 31.44 30.42 45 ~ 49歲 36.92 31.83 27.93 32.90 28.12 28.58 32.43 28.78 50歲及以上 34.61 34.53 32.89 26.53 20.24 26.78 30.65 31.81 失業者平均失業期間-按年齡分 資料來源：主計處人力資源調查報告

失業者平均失業期間-按教育程度分 單位 ： % 失 業 期 間 年 教育程度 93 94 95 96 97 98 99 100 國中及以下 失 業 期 間 年 教育程度 93 94 95 96 97 98 99 100 國中及以下 29.48 32.30 27.78 25.16 25.49 27.37 28.00 27.52 國小及以下 33.15 32.21 28.93 22.86 27.19 27.30 26.20 23.52 國中 27.73 32.34 27.36 25.90 24.76 27.40 28.66 高中（職） 31.53 28.98 23.30 22.85 24.57 26.51 31.19 27.32 高中 33.27 29.79 24.82 22.05 25.01 29.70 32.15 高職 30.99 28.71 22.87 23.07 24.42 25.51 30.85 25.87 大專及以上 26.84 27.92 26.21 26.13 24.54 28.24 31.95 29.60 專科 27.48 28.17 23.98 25.20 25.27 27.23 30.19 28.56 大學及以上 26.06 27.67 28.02 26.80 24.13 28.86 32.94 30.04 資料來源：主計處人力資源調查報告

4. Inflation and Unemployment Note: Because our focus is on the labor market, we shall emphasize the price of labor-the wage rate-when discussing the issue of inflation.

(1) The Basic Model of the Inflation/Unemployment Trade-Off Wage E Supply Demand W0 W1 W2 W3 W4 It is reasonable to assume that the speed at which The wage rate changes is related to the extend to which the labor market is in disequilibrium, as measured by the excess demand for labor. i.e., the percentage rate of change of wage ( ) is proportional to the excess demand for labor (X)

W X W=αX W1 X1 Excess Supply X<0 Excess Demand X>0 Excess Demand for Labor (X) U U1 U* Relationship Between the Excess Demand for Labor and the Unemployment Rate Because the excess demand for labor is usually not observable, it is necessary to replace it with an observable variable, such as the unemployment rate. U* is the unemployment rate that exists when the excess demand for labor is zero. i.e., natural or full-employment rate of unemployment.

Trade-off Between Wage Inflation and the Unemployment Rate

(2) The Inflation/Unemployment Trade-Off The negative relationship between unemployment and wage inflation was dubbed the Phillips curve. During the 1970s the relationship appears to have broken down. →An interpretation is that while a trade-off between the rates of inflation and unemployment exists at a point in time, the position of the trade-off curve is determined by a number of other factors that can change over time. Rate of Wage Inflation Unemployment

Rate of Wage Inflation ( ) Unemployment Rate (U) U0 W0 W1 W2 1960s 1970s Early 1980s Progressively higher rates of wage inflation have become associated with any given level of unemployment. It is also possible that the Phillips curve has become much flatter over recent years, so that the decrease in wage inflation accompanying a 1% point increase in the unemployment rate is now smaller than it once was.