Explanacons for labour market mismatch have related

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Unformatted text preview: ur is combined, but also on the received wage. Before we look at how efficiency wage impact on the labour market, we need to introduce basic concepts: a. Labour producCvity = efficiency = effort: output produced per work hour, b. Unit labour cost (ULC): wage cost per unit of output, so that: Let Y depend on physical input L and on labour effort or efficiency x (which depends on the real wage): The firm profit is: The firm maximizes profits wrt L and w: Then: Mismatch The classical labour market relies on three assumpCons: 1. No geographic dimension. 2. Labour homogeneity. 3. Perfect informaCon. The economies which have suffered most from persistently high unemployment have been those which are least flexible in matching their unemployed with available employment openings. ExplanaCons for labour market mismatch have related to inadequate educaCon and training or insufficient geographical and occupaConal labour mobility. In a labour market with mismatch and informaCon problem...
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This note was uploaded on 03/11/2013 for the course ECON ES20013 taught by Professor Martin during the Spring '12 term at University of Bath.

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