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Adverse Selection of Wage Cuts Argument

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Adverse Selection of Wage Cuts Argument? The adverse selection of wage cuts argument points out that if an employer reacts to poor business conditions by reducing wages for all workers, then the best workers, those with the best employment alternatives at...

Insider-Outsider Model

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Insider-Outsider Model? The insider-outsider model of the labor force, in simple terms, argues that those already working for firms are “insiders,” while new employees, at least for a time, are “outsiders.” A firm depends on its insiders to keep the...

Relative Wage Coordination Argument

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Relative Wage Coordination Argument? The relative wage coordination argument points out that even if most workers were hypothetically willing to see a decline in their own wages in bad economic times as long as everyone else also experiences such a...

Natural Rate of Unemployment

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Natural Rate of Unemployment? Cyclical unemployment explains why unemployment rises during a recession and falls during an economic expansion, but what explains the remaining level of unemployment even in good economic times? Why is the unemployment rate...

Unemployment Insurance – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

How does U.S. unemployment insurance work? Unemployment insurance is a joint federal–state program that the federal government enacted in 1935. While the federal government sets minimum standards for the program, state governments conduct most of the administration....
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