Sectoral shifts, frictional unemployment, and job searches Suppose the world price of cotton falls substantially. The demand for labor among cotton-producing firms in Texas will . The demand for labor among textile-producing firms in South Carolina, for which cotton is an input, will . The temporary unemployment resulting from such sectoral shifts in the economy is best described as unemployment. Suppose the government wants to reduce this type of unemployment. Which of the following policies would help achieve this goal? Check all that apply. a. Offering recipients of unemployment insurance benefits a cash bonus if they find a new job within a specified number of weeks b. Extending the number of weeks for which unemployed workers are eligible for unemployment insurance benefits from the government Improving a widely used job-search website so that it matches workers to job vacancies more effectivelyc. Taxing the price of placing a resume or posting a job opening on a job-search website

Decrease | Increase | Frictional | Choices: Offering cash bonuses & Improving job-search websites

Explanation:

Unemployment is defined as the number of people who are willing, able and actively seeking work but haven’t found any.

When the price of cotton falls, cotton producers are discouraged by lower sales and lower profits. Therefore, there is a leftward movement along the supply curve, causing a fall in quantity supplied. Hence, lower workers are required at cotton farms, which leads to a decrease in the demand for labor in cotton producing firms.

Cotton is a major raw material in textile industries. When the price of cotton falls, it means the cost of production of textiles is lower. Hence, these firms are encouraged due to higher profits. Thus, quantity supplied shifts right. This increase in quantity produced leads to a higher demand for laborers in the textile industry causing an increase.

Frictional unemployment occurs during the brief period that workers are unemployed when they are moving between jobs. Offering a cash bonus to those who are able to find a job within a designated time span will motivate them to look for jobs much faster, to obtain the bonus, thus reducing unemployment. At the same time, improving job search websites will allow potential employees to find potential employers much faster and effectively which would also reduce unemployment.

Extending the number of weeks for which unemployed workers are eligible for unemployment insurance will increase frictional employment as this demotivates them from finding a job fast. Taxing the posting of job openings and resumes will also discourage employers from seeking out potential employees and the unemployed from applying for jobs as this makes it expensive, hence increasing frictional unemployment.

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