Chap 8 Flashcards
if employers reduce wages for all workers, the best will leave
adverse selection of wage cuts argument
unemployment closely tied to the business cycle, like higher unemployment during a recession
cyclical unemployment
those who have stopped looking for employment due to the lack of suitable positions available
discouraged workers
the theory that the productivity of workers, either individually or as a group, will increase if they are paid more
efficiency wage theory
unemployment that occurs as workers move between jobs
frictional unemployment
an unwritten agreement in the labor market that the employer will try to keep wages from falling when the economy is weak or the business is having trouble, and the employee will not expect huge salary increases when the economy or the business is strong
implicit contract
those already working for the firm are “insiders” who know the procedures; the other workers are “outsiders” who are recent or prospective hires
insider-outsider model
this is the percentage of adults in an economy who are either employed or who are unemployed and looking for a job
labor force participation rate
the unemployment rate that would exist in a growing and healthy economy from the combination of economic, social, and political factors that exist at a given time
natural rate of unemployment
those who are not working and not looking for work-whether they want employment or not; also termed “not in the labor force”
out of the labor force
across-the-board wage cuts are hard for an economy to implement, and workers fight against them
relative wage coordination argument
unemployment that occurs because individuals lack skills valued by employers
structural unemployment
individuals who are employed in a job that is below their skills
underemployed
the percentage of adults who are in the labor force and thus seeking jobs, but who do not have jobs
unemployment rate
