Why People Don't Find Work
AbstractThis paper provides a brief, non-technical survey of the major theories about why people remain unemployed. The aim is to provide a macroeconomic perspective on the microeconomic problem of why people don't find work. The first section deals with market-clearing theories: the natural rate hypothesis, the intertemporal substitution hypothesis, and real business cycle theory. The second section deals with imperfect information as an impediment to finding work: search theory, implicit contract theory, and efficiency wage theory. The third section concerns labour market institutions as sources of unemployment: labour unions, supply shocks combined with real wage rigidity, and automation and trade combined with real wage rigidity. The fourth and fifth sections deal with deficient demand and labour turnover costs as sources of unemployment. The final section deals with unemployment dynamics.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 883.
Date of creation: Dec 1993
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Find related papers by JEL classification:
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
- J2 - Labor and Demographic Economics - - Demand and Supply of Labor
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
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- Hans Gersbach, 1999. "Product market competition, unemployment and income disparities," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 135(2), pages 221-240, June.
- Mike Campbell, 2000. "Reconnecting the Long Term Unemployed to Labour Market Opportunity: The Case for a 'Local Active Labour Market Policy'," Regional Studies, Taylor and Francis Journals, vol. 34(7), pages 655-668.
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