CHAPTER 13
Quick Check
1. a. False. Productivity growth is unrelated to the natural rate of unemployment. If the
2. a. u = 1-(1/(1+))(A/Ae)
3. An increase in labor productivity has no effect on the natural rate of unemployment, because the
4. a. Reduce the gap, if this leads to an increase in the relative supply of high-skill workers.
Dig Deeper
5. Technological change has led to a reduction in agricultural employment, but evidently has had no
6. a. P = Pe(1+)(Ae/A)(Y/AL)
i. For a given level of Y, an increase in A reduces Y/A, which implies a reduction in
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ii. To the extent that Ae lags behind A, Ae/A falls. In effect, workers do not receive
b. AS shifts down. Given Ae/A=1, only effect (i) is relevant.
c. In this case, effects (i) and (ii) from part (a) are relevant. Compared to part (b),
7. a. W/P=F(1-N/L,z)
Explore Further
8. a. Projections for job decline from 2014-2024
b. Projections for job growth from 2008-2018
9. a. For a given markup, the real wage grows at the rate of technological progress. Clearly,
c. The real wage of low-skill workers has fallen markedly, which suggests that the relative
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10. a. Figure 1 in the text box “The Long View: Technology, Education, and
b. The supply and demand argument is based on the observation that the demand for skilled workers
c. Here the argument is that the demand for low-skilled workers has fallen due to international
d. In general Democrats favour polices that reduce income inequality and Republicans do not
e. If incomes of the better educated are rising more rapidly than of the less educated and it is more
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