LABRST 3A03 Lecture Notes - Lecture 11: Aggregate Demand, Structural Adjustment
14 Dec 2017
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Document Summary
The most common search activities are looking at job advertising or contacting employers directly. Matching unemployed workers to open job vacancies becomes particularly challenging during structural adjustment. High dispersion of employment growth across industries is associated with periods of high unemployment (-> supports the sectoral shifts hypothesis) Based on the hypothesis, labour market rigidities will matter most when the labour market is relied on to relocate workers across sectors in response to demand shifts. Roles played by labour market institutions (ex/ gov"t policy, protection laws, high min wages, and strong unions) Reasons : why wages may remain too high in equilibrium. Key assumptions of the competitive model are reconsidered: Deals with issues that arise when firms and workers are engaged in continuing employment relationship. Seeks to explain phenomena such as rigid wages and the use of quantity adjustments (ex/layoff) rather than wage adjustments when there is shock on product demand.
