TAILIEUCHUNG - Lecture Labour market economics: Chapter 18 - Dwayne Benjamin, Morley Gunderson, Craig Riddell

Chapter 18 - Unemployment: causes and consequences. The main contents of this chapter include all of the following: Types of unemployment, wage rigidity, voluntary unemployment, imperfect information, unemployment insurance. | Chapter 18 Unemployment: Causes and Consequences Created by: Erica Morrill, Fanshawe College © 2002 McGraw-Hill Ryerson Ltd. Chapter Focus Types of unemployment Wage rigidity Voluntary unemployment Imperfect information Unemployment insurance Chapter 18- © 2002 McGraw-Hill Ryerson Ltd. Types of Unemployment Frictional Structural Demand-Deficient Seasonal Involuntary (associated with wage rigidity) Chapter 18- © 2002 McGraw-Hill Ryerson Ltd. Search Unemployment Imperfect information on both sides of the labour market Undertaking a job search has costs and benefits determine if it is worthwhile to initiate the job search determine when to discontinue Chapter 18- © 2002 McGraw-Hill Ryerson Ltd. Optimal Job Search Marginal expected benefit equals marginal expected cost Diminishing returns Duration - less likely a better offer will be received “Stopping Rule”- minimum acceptable wage Chapter 18- © 2002 McGraw-Hill Ryerson Ltd. Figure Optimal Job Search Search .

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