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Chapter 21: Q. 47 (page 526)

As the baby boomer generation retires, what should happen to wages and employment? Can you show this graphically?

Short Answer

Expert verified

As the baby boomer generation retires, the wage rate would increase while the employment rate will decrease.

Step by step solution

01

Step 1. Baby boomer generation.

The baby boomer generation word, was first introduced after World War two, the generation of the most tactful people of the mid-1960s, who contribute hugely to the World Economy.

02

Step 2. Graphical Representation.

Wages & Quantity of labor affected by the baby boomer generation.

03

Step 3. Explanation for the graph.

As the baby boomers generation retires, the number of workers in the labor force decreases, so the supply of labor decreases & the supply curve shift towards the left (S to S1),

and the wages rate will increase from W to W1 because when there will be less labor they will demand higher wages, firms will not pay higher wages causing the decline in the employment rate, so the quantity of labor supplied changes from Q to Q1 because of all this the unemployment rate falls as many workers become discouraged workers.

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Most popular questions from this chapter

A country with a population of eight million adults has five million employed, 500,000 unemployed, and the rest of the adult population is out of the labor force. What鈥檚 the unemployment rate? What share of the population is in the labor force? Sketch a pie chart that divides the adult population into these three groups.

Assess whether the following would be counted as 鈥渦nemployed鈥� in the Current Employment Statistics survey.

a. A husband willingly stays home with children while his wife works.

b. A manufacturing worker whose factory just closed down.

c. A college student doing an unpaid summer internship.

d. A retiree.

e. Someone who has been out of work for two years but keeps looking for a job.

f. Someone who has been out of work for two months but isn鈥檛 looking for a job.

g. Someone who hates her present job and is

actively looking for another one.

h. Someone who decides to take a part-time job because she could not find a full-time position.

Would you expect the natural rate of unemployment to be roughly the same in different countries?

Beginning in the 1970s and continuing for three decades, women entered the U.S. labor force in a big way. If we assume that wages are sticky in a downward direction, but that around 1970 the demand for labor equaled the supply of labor at the current wage rate, what do you imagine happened to the wage rate, employment, and unemployment as a result of increased labor force participation?

Why is there unemployment in a labor market with

flexible wages?
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