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Involuntary Unemployment in a Competitive Labour Market


  • Gangolf Groh

    () (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg)


High an persistent unemployment, especially in the sector of low-skilled work, is usually attributed to the presence of minimum wages or unemployment benefits creating a reservation wage at wich labour demand of firms is insufficient. While not refusing this view this paper argues that also without these obstacles a situation is likely to occur which is similar to unemployment and in a rigorous sense even worse: people not finding a job in the sector of "honest work" at a wages sufficient to meet minimum consumption are forced to recourse to less desirable activities. The topic is analyzed in an OLG-context with two working periods for each generation.

Suggested Citation

  • Gangolf Groh, 2007. "Involuntary Unemployment in a Competitive Labour Market," FEMM Working Papers 07009, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  • Handle: RePEc:mag:wpaper:07009

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    References listed on IDEAS

    1. Gibson, David R. & Sharp, Gunter P., 1992. "Order batching procedures," European Journal of Operational Research, Elsevier, vol. 58(1), pages 57-67, April.
    2. Stutzle, Thomas, 2006. "Iterated local search for the quadratic assignment problem," European Journal of Operational Research, Elsevier, vol. 174(3), pages 1519-1539, November.
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