Book contents
- Frontmatter
- Brief Contents
- Contents
- Acknowledgments
- To the Student
- To the Teacher
- Part I Introduction
- Part II The National Accounts
- Part III Trends and Cycles
- Part IV Financial Markets
- Part V Aggregate Supply
- 9 Aggregate Production
- 10 Economic Growth
- 11 The Ideal Labor Market
- 12 Unemployment and the Labor-Market Process
- Part VI Aggregate Demand
- Part VII Macroeconomic Dynamics
- Part VIII Macroeconomic Policy
- Part IX Macroeconomic Data
- Symbols
- Glossary
- Guide to Online Resources
- Index
- References
12 - Unemployment and the Labor-Market Process
from Part V - Aggregate Supply
Published online by Cambridge University Press: 05 June 2012
Book contents
- Frontmatter
- Brief Contents
- Contents
- Acknowledgments
- To the Student
- To the Teacher
- Part I Introduction
- Part II The National Accounts
- Part III Trends and Cycles
- Part IV Financial Markets
- Part V Aggregate Supply
- 9 Aggregate Production
- 10 Economic Growth
- 11 The Ideal Labor Market
- 12 Unemployment and the Labor-Market Process
- Part VI Aggregate Demand
- Part VII Macroeconomic Dynamics
- Part VIII Macroeconomic Policy
- Part IX Macroeconomic Data
- Symbols
- Glossary
- Guide to Online Resources
- Index
- References
Summary
If the typical recession were nothing more than a 2–3 percent fall in real GDP, most people would probably shrug it off as a nuisance. But recessions are typically associated with a sharp rise in unemployment, so that the costs are painfully concentrated on a narrow segment of the population. Why the economy should suffer from recurring bouts of unemployment is one of the great puzzles of macroeconomics. In this chapter, we explore the concept and causes of unemployment and lay the groundwork for macroeconomic policies that might reduce it.
The Concepts of Employment and Unemployment
One implication of the perfectly competitive model of the labor market as we described it in the last chapter is that everyone who wants to work at the market wage is able to find work at that wage. To put another way: there is no involuntary unemployment. Yet, every month the government announces that some significant percentage of the labor force is unemployed. An important question, then, is, why is there unemployment?
Before we attempt to answer that question, it will help to understand what unemployment means. In this section, we shall consider labor markets out of equilibrium. Our goal is to define some important concepts. We return to the question of why the labor market is out of equilibrium in the next section.
Information
- Type
- Chapter
- Information
- Applied Intermediate Macroeconomics , pp. 443 - 484Publisher: Cambridge University PressPrint publication year: 2011
References
www.bls.gov/opub/hom/
Efficiency Wage Models of the Labor Market
Cambridge
Cambridge University Press
1986
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