Designing a Policy Package for Labor Market Improvement
Imagine you are an economic advisor to a country experiencing high structural unemployment and stagnant real wages. Drawing upon the principles of the wage-setting (WS) and price-setting (PS) model, propose a coherent package of two distinct policies designed to improve these labor market outcomes. For each policy, you must:
- Identify whether it primarily affects the WS or PS curve.
- Explain the mechanism through which it shifts the relevant curve.
- Describe the expected final impact on the equilibrium real wage and the natural rate of unemployment.
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Introduction to Macroeconomics Course
Ch.2 Unemployment, wages, and inequality: Supply-side policies and institutions - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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