ECON211 Lecture Notes - Lecture 6: Discouraged Worker, Absenteeism, Underemployment

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Labour market equilibrium: intersection of labour demand and supply curves, where aggregate supply and demand for labour are equal (ad =as) Belief in rapid real wage adjustment to equilibrium is the classical model of labour market. Focus on equilibrium implies an absence of sustained unemployment (at least due to an absence of suf cient jobs) Due to an increasing demand for labour relative to supply. Which re ects an increasing marginal physical product of labour (at any level of employment)- explained by: Many industrialised countries have widening gap in wages between skilled and less skilled. Effects of globalisation: the increasing tendency of markets to become international in nature than country speci c (;"), particularly nancial. Due to increasing understanding of bene ts to a country of international trade. Due to technology changes in areas of communications. Trade liberalization => increase demand of domestic residents for imports, while export industries will be expanding.

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