Ask the Economist: Slow increase in employment rate despite high GDP growth.
Starting today, I’ll be entertaining queries pertaining to economics. You can email me your questions at musingsofayoungeconomist@gmail.com. You may also post a question at this PinoyExchange link
Here’s a question posted by drhenry4 on PinoyExchange :
(The) Philippine economy grew by 7.3% last year, the fastest in the country’s history, but employment rate grew by (a) mere 0.2%. How is this so?
For this analysis, I will be using the unemployment rate for convenience. By definition, the unemployment rate is the percentage of unemployed workers in the labor force. The labor force, here in the Philippines, is defined by the NSCB as “all persons 15 years old and over as of their last birthday who are either employed or unemployed.” In notation form, Labor Force = Employed + Unemployed.
In theory, what causes unemployment? Two things:
- Frictional Unemployment. This is the time it takes people in the labor force to look for a job. This occurs because it takes time to match people and jobs (due to preferences, educational background, previous training, mobility in terms of location, and specific industry demand for labor).
- Wage Rigidity. When real wage is above equilibrium level, the supply of workers exceeds the demand for them. Firms would then limit their demand for labor resulting in unemployment.
Continue reading this article at Musings of a Young Economist.
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Are U-turns saving us money?
According to a recent study (reported here by the Philippine Daily Inquirer) by the Metropolitan Manila Development Authority (MMDA), u-turn slots are helping us save quite a hefty sum. The study reports that the U-turns slots instilled by the MMDA generates Php 40 million to Php 50 million in savings for motorists each year since 2005. These savings are brought about by the increase in the average vehicular speed on major roads where 23 U-turn slots have been placed by the MMDA. According to the report, Php 2 billion are saved each year by motorists in terms of gains in productivity and opportunity alone. As for fuel savings, motorists are saving Php 42.84 million on nonwidened roads and Php 51.45 millon on widened roads.
I think most of you would be scratching your heads right now. Really? We’re saving that much? It doesn’t actually feel that way. U-turns have been, for the most part, hasseling most of us — often adding burden to an already congested road. I’m not even mentioning the hazard the concrete blockades brings at night. I do think that U-turns are saving us money in some way. However, let’s look at it from another perspective – costs.
Read the full article here
http://musingsofayoungeconomist.co.cc
The Economics behind Olympic Medals
Finally, the 2008 Olympic Games have come to an end. We can all go back to our normal and boring lives. But before we forget about Michael Phelps, the Bird’s Nest, and the Chinese prostitutes complaining about bad business, lets look at the final standings of the top four countries.
China has the most gold medals with 51. They garnered a total of 100 medals, second only to the United States. Second is the USA which collected 36 gold medals but garnered 110 medals all in all. Third place goes to Russia with 72 medals, 23 of which are gold. Great Britain received 47 medals, 19 of which are gold.
I know what you’re thinking. What does this got to do with economics? Well, a professor from Colorado College named Daniel Johnson tried to predict the outcome of the Beijing Games.
Read more here
http://musingsofayoungeconomist.co.cc
