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In labour economics, Shapiro–Stiglitz theory of efficiency wages (or Shapiro–Stiglitz efficiency wage model) [1] is an economic theory of wages and unemployment in labour market equilibrium. It provides a technical description of why wages are unlikely to fall and how involuntary unemployment appears. This theory was first developed by Carl ...
In these models, unemployment is voluntary in the sense that a worker might choose to endure unemployment during a long search for a higher paying job than those immediately available; however, there is an involuntary element in the sense that a worker does not have control of the economic circumstances that force them to look for new work in ...
Keynesian economics advocates the use of automatic and discretionary countercyclical policies to lessen the impact of the business cycle. One example of an automatically countercyclical fiscal policy is progressive taxation. By taxing a larger proportion of income when the economy expands, a progressive tax tends to decrease demand when the ...
Overqualification is the most common form of underemployment equilibrium and is a direct result of oversupply. It defines the situation when individuals work in professions which require less education, skill, experience or ability than they possess. In economic terms, these agents are producing less than their socially optimal output.
Frictional unemployment is a form of unemployment reflecting the gap between someone voluntarily leaving a job and finding another. As such, it is sometimes called search unemployment , though it also includes gaps in employment when transferring from one job to another.
Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) [2] not being in paid employment or self-employment but currently available for work during the reference period. [3] Unemployment is measured by the unemployment rate, which is the number of people who are ...
Full employment is an economic situation in which there is no cyclical or deficient-demand unemployment. [1] Full employment does not entail the disappearance of all unemployment, as other kinds of unemployment, namely structural and frictional, may remain. For instance, workers who are "between jobs" for short periods of time as they search ...
The natural rate of unemployment is a combination of frictional and structural unemployment that persists in an efficient, expanding economy when labor and resource markets are in equilibrium. Occurrence of disturbances (e.g., cyclical shifts in investment sentiments) will cause actual unemployment to continuously deviate from the natural rate ...