Reality of employment market is very different from the theory

People Problems

24th August, 2014

Labour market economic purists and classical traditionalists do not like fixed wage rates.

They believe that if there is high unemployment, then by allowing wage rates to fall as far as is necessary, employers will take on more workers and so the unemployment problem will disappear.

The price of labour will find its equilibrium, or market rate, and all will be well. This is the theory according to those who have a vague idea of...

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