Enter aggregate supply - Why is there unemployment in equilibrium? - Mismatch

5 important questions on Enter aggregate supply - Why is there unemployment in equilibrium? - Mismatch

What are the three most important simplifying assumptions in the model of chapter 6?

No geographic dimension
Labour is homogenous (everybody is suited for all jobs)
Perfect information (everybody knows all job openings)

What does equilibrium unemployment refer to?

To the difference between the effective and gross labour supply curve

What is the difference between the effective and gross labour supply?

Gross labour supply is the supply when assumed there is perfect information, no geographical element, everybody suited for the same job ect. Effective is what is in reality reached
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What is structural unemployment?

Unemployment that does not go away in equilibrium, mostly due to institutions or habits

What is frictional unemployment?

Unemployment when in between jobs

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