Student

Practice Commentary:
The last two years, because of the world economic crisis, the unemployment rate is one of the socioeconomic indicators more relevant to analyze. According to economists,unemployment is defined as the situation when people are actively seeking but unable to find work. In addition labour force is composed by people actively employed and those who are in unemploymentcondition. From these two variables, it is possible to calculate the percentage of the total labour force that is unemployed; it is defined as unemployment rate.
During the last semester 2012, United Stateseconomic authorities expected a decrease of unemployment rate; it befell, but not because of the increase of employed people. The structure of the rate was affected due to the fact that unemploymentpeople gave up looking for work. In this context, the demand of work does not decrease since new jobs absorbed this surplus like supply of work.
The diagram below shows the labour market behavior.S
S

Average wage level
Average wage level
Surplus 1
Surplus 1

D0
D0

Surplus 2
Surplus 2
D1
D1

Q1D
Q1D
Q0D
Q0D
Q0S
Q0S

Quantity of labour (QD)

Quantity of labour (QD)The variables included in the graph are QL (Quantity of labour) and W (Average wage level). During the crisis, the quantity of labour demanded is more than the supplied, Q0D > Q0S this causes asurplus demand. Because of the negative expectations of unemployed people to found work, the demand suffers a shift to the left. Even though the demand of labour decreases to Q1D the demand surplusstill exists Q1D > Q0S.
Nevertheless, services sector does not figure like the general diagram above due to the increase of the number of this type of jobs.
S0
S0

S1
S1

Average wage level(W)
Average wage level (W)

D0
D0

Q0D= Q1S
Q0D= Q1S
Q0S
Q0S

Quantity of labour (QD)

Quantity of labour (QD)

In this case, the supply labour curve for services sector changes its...