Does the Labour Market Clear?
Does the Labour Market Clear?
Equilibrium unemployment is unemployment consistent with the natural rate, where there is no aggregate excess supply of labour at the prevailing real wage. It can include frictional unemployment as people search between jobs and structural unemployment caused by mismatches of skills or location across labour-market segments. Unemployed jobseekers and vacancies can therefore coexist without being numerically equal.
Step-by-step lessons on CIE Intl A Level Economics 9.3.2 equilibrium and disequilibrium unemployment (including hysteresis). Each one builds up to exam-style questions.