The Labor Market & Matching
Mechanism for setting wages and determining employment.
The Labor Market.
Short-term unemployment between jobs.
Frictional unemployment.
Non-seasonal fluctuations in economic activity.
Economic cycles.
Curve showing short-run inflation vs. unemployment.
The Phillips Curve.
High unemployment reduces this government revenue.
Tax revenue.
Working population plus those actively seeking work.
The Labor Force.
Predictable unemployment tied to times of the year.
Seasonal unemployment.
Law relating unemployment changes to GDP gaps.
Okun's Law.
Shape of the long-run Phillips curve.
Vertical.
Long-term wage harm to young workers entering during recessions.
Scarring effects.
Curve showing unemployment versus job vacancies.
The Beveridge Curve.
The two components of the Natural Rate of Unemployment.
Frictional and structural unemployment.
Lost production when unemployment exceeds the natural rate.
The GDP gap.
Unemployment rate where inflation stabilizes.
NAIRU (Non-Accelerating Inflation Rate of Unemployment).
High inflation combined with high unemployment.
Stagflation.
The 'u' and 'v' in the matching function m = m(u, v).
Unemployed workers and job vacancies.
People working jobs for which they are overqualified
Underemployed
The level of economic activity reaches its lowest point
A trough.
Institutional factors preventing wages from adjusting freely.
Labor market rigidities.
Labor market divided into primary and secondary sectors.
A dual labor market.
Negative externality from too many agents on one side of a market.
Congestion.
People who have stopped searching for employment
Discouraged Workers
Firms retain underutilized workers during downturns
Labor hoarding.
Theory that above-market wages boost productivity.
Efficiency Wage Theory.
High unemployment persisting after economic recovery.
Hysteresis.