Wages and Labour Market Policies

Wages are very important as the determinant of employment, thus unemployment, and of the working of the labour market in general. Under the condition of perfect competition in both the product market and the factor market the price mechanism produces no unemployment. Unemployment, however, is always positive in reality for various reasons. Some economists such as Friedman (1968) call it the natural rate of unemployment, and propose that it is difficult to lower it with any policies. These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.