One Pager ------ Week VI

Natural Rate of Unemployment: The Natural rate of unemployment occurs when the labour market is in equilibrium; it is mainly composed of frictional and structural unemployment. Therefore factors that affect these types of unemployment will alter the natural rate. In addition, the natural rate of unemployment is the long-run equilibrium in the labour market, and economists often appeal to it as a proxy for broader macroeconomic equilibrium.

Unemployed: Unemployment in Pakistan comprises all persons ten years of age and above who during
the reference period (Last four weeks) were: i) Without work i.e. were not in paid-employment or self-employment; and ii) Currently available for work i.e. were available for paid employment or selfemployment: or iii) Not currently available for the following reasons: illness, will take a job within a month, is temporarily laid off, is an apprentice and is not willing to work: or iv) Seeking work during last week. Question 1 (Production and Growth) In many developing nations, young women have lower enrolment rates in secondary school than do young men. Describe several ways in which greater educational opportunities for young women could lead to faster economic growth in these countries. Answer: Greater educational opportunities for women could lead to faster economic growth in the countries of South Asia because increased human capital would increase productivity and there would be external effects from greater knowledge in the country. Second, increased educational opportunities for young women may lower the population growth rate because such opportunities raise the opportunity cost of having a child. Question 2 (Unemployment and its natural rate) Are minimum-wage laws a better explanation for structural unemployment among less educated people or among university graduates? Why? Answer: Minimum-wage laws are a better explanation for unemployment among less educated people than among university graduates. Less educated people have fewer jobrelated skills than university graduates do, so their wages are low enough to be affected by the minimum wage. University graduates' wages generally exceed the minimum wage.