The Inherent Unemployment Equilibrium
In an economic framework where the real wage required to ensure worker effort increases as more people are employed, analyze why a situation of zero unemployment is not a stable equilibrium. In your explanation, consider the incentives for an individual worker when everyone who wants a job already has one.
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Introduction to Macroeconomics Course
Ch.1 The supply side of the macroeconomy: Unemployment and real wages - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Analysis in Bloom's Taxonomy
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In an economic model where the real wage required to motivate workers increases as the level of employment rises, why is an equilibrium with zero unemployment impossible?
The Impossibility of Zero Unemployment
The Inherent Unemployment Equilibrium
In an economic model where a higher real wage is required to motivate workers as employment levels rise, an equilibrium with zero unemployment is impossible because the wage needed to ensure worker effort would become infinitely high.
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