Why will there always be at least some unemployment? Give an example of a public policy that affects the unemployment rate. Is it positive or negative? Why?
There will always be at least some unemployment. There is a difference between a natural rate of unemployment and the deviation from that, cyclical unemployment. Minimum wage laws are an example of public policy that affects unemployment rate. Many workers earn above the minimum wage, however, the effect can be negative. This is because it can raise the quantity of labor supplied and reduce the amount of labor demanded.
In what ways do unions affect the natural rate of unemployment? How about human resource regulations, such as safety or age-based rules? Do all of these affect the cost of hiring employees? Should the affect of a regulation on employment be considered as a part of the adoption process? Why or why not?
Unions affect the natural rate of unemployment by raising the wage above the equilibrium level, this then raises the quantity of labor supplied and reduces the quantity of labor demanded, end result is unemployment. Human resource regulations also affect the natural rate of unemployment, these polices are more costly for business and hiring. I do think that the affect of a regulation on employment should be considered as a part of the adoption process because of the cost on the business.
Principles of Macroeconomics Spring 2020 