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The Labour Market: Powerpoint To Accompany
The Labour Market: Powerpoint To Accompany
Chapter 6
The Labour
Market
Section 6.1: A Tour of the Labour Market
N = Employed: 10.7 mn
U = Unemployed: 0.48 mn
u=Unemployment
Participation rate = rate = 100*0.48/11.2 =
100*11.2/17.2 = 65% 4.3%
W P eF (u ,z)
( , )
1. Both workers and firms care about real wages (W/P), not
nominal wages (W).
P (1 )W
• The term is the markup of the price over the cost of production.
• If all markets were perfectly competitive, = 0, and P =W.
measures the extent of imperfect competition in goods markets.
• Australian Competition and Consumer Commission (ACCC) – tries to
reduce
The Wage-Setting
Relation, the Price-
Setting Relation, and
the Real Wage
The Wage-Setting
Relation, the Price-
Setting Relation, and
the Natural Rate of
Unemployment
The natural rate of
unemployment is the
unemployment rate such
that the real wage chosen
in wage setting is equal
to the real wage implied
by price setting.
1
F (u n ,z)
1
Unemployment
Benefits and the
Natural Rate of
Unemployment
An increase in
unemployment
benefits (z)
leads to an
increase in the
natural rate of
unemployment.
N n L (1 u n )