ECON282 Lecture 1: Labour Market.pdf
25 Jan 2015
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Document Summary
Labour market equilibrium (continued: the problem with the classical model of the labour market is that it implies that there is zero unemployment. Full-employment output: full-employment output (potential output) ( ) is the level of output produced in the economy when the labour market is in equilibrium (when wages and prices have finished adjusting). Full-employment output (continued: effects of an adverse supply shock: The output is directly reduced by reduction in productivity. The mpn falls, full employment falls, full employment output falls. Unemployment (continued: the labour force is the sum of all employed and unemployed workers. Changes in employment status: some workers become discouraged workers : unemployed people that get frustrated because they can"t find a job, so they stop searching and leave the labour force. Unemployed: unemployment duration measures how long an individual is unemployed. Frictional unemployment: frictional unemployment is the result of workers searching for good jobs and businesses searching for appropriate workers.
