Answer to Question #72098 in Macroeconomics for tyiba

Question

how would each of the following likely affect the natural
unemployment rate?
11 A new law prohibits people from seeking employment
before age eighteen
b A new Internet service, Findwork com, makes it
easy for people to check on the availability of jobs
al'Ound the country
c The length of time that unemployed workers can
receive government benefits increases from six
months to one year
d A shift in the public's buying habits greatly expands
the demand for sophisticated consumer electronics
while reducing the demand for tladitional consumer
goods and services, such as clothing and
restaurant meals
e Tight monetary policy, introduced to gel the inflation
rate down, drives the economy into a recession

Answer 1

A. In some countries of the world children have no right to take part in labour force. Shortly to say it is criminal to hire children. For this case if the government accepts the law which prohibits seeking job for people under 18 years old this will have no affect on natural rate, as people under this age are not accepted as part of labour force. On the other hand if there are countries where children work have been permitted before this new law, such action again will not have any influence on the rate, as this kind of unemployment is not existed in natural unemployment.
B. Actually these new measure will cut the rate, as now people who have become unemployment by hope to find more interesting job, will have such a chance to find their place under the sun.
C. The reality is that if we prolong these benefits unemployment people will not have eagerness to find proper jobs as soon as possible, on the other hand the other group will try to leave existing jobs for a while to find more comfortable one until they will get these prolonged benefits. That is why I am sure after this action we may face either no changes or increase in the rate of the natural unemployment.
D. I tend to think that this situation will cause an increase of structural unemployment, which is a part of natural unemployment, so in its turn we will have an increase in the natural unemployment rate.
E. The financial crisis of 2008 wiped out a staggering 8.3 million jobs. The unemployment rate rose from 4.7 percent to 10.1 percent at its peak in 2009. This huge loss meant that many of the unemployed stayed that way for six months or more. Long-term unemployment made it even more difficult for them to get back to work. Their skills and experience became outdated. Does this mean that the recession would leave, as its legacy, a higher natural rate of unemployment? Research done by the Cleveland Federal Reserve said yes, this could be the case. That's because job turnover slowed. Throughout the recession, those with jobs were less likely to leave them. In fact, by 2011, those leaving jobs (the separation rate) was as low as it was during the boom before the recession. The reasons were different though. During the boom, people didn't leave jobs. They liked them and were paid well. Employers had a difficult time finding new employees, so they made sure workers were happy. During the recession, workers were afraid to leave and look for better employment. They put up with long hours and no raises just to keep their jobs. The natural rate of unemployment typically rises after a recession. Frictional unemployment increases, since workers can finally quit their jobs, confident they can find a better one now that the recession is over. In addition, structural unemployment is higher, since workers have been unemployed for so long their skills no longer match the needs of businesses. Between 2009 and 2012, the natural rate of unemployment rose from 4.9 percent to 5.5 percent. That was higher than during the recession itself. Researchers grew concerned that the length and depth of the recession meant the natural rate would remain elevated. But by 2014, it had fallen to 4.8 percent. (Source: "Natural Rate of Unemployment," St. Louis Federal Reserve, March 22, 2017.)