The Labour Market: Workers, Wages, and Unemployment - Structural Barriers to Employment

8 important questions on The Labour Market: Workers, Wages, and Unemployment - Structural Barriers to Employment

What leads to structural unemployment related to minimum wage laws?

Policies can create labor market rigidities, preventing equilibrium and causing unemployment.

What happens when the minimum wage is set above the market equilibrium wage?

An excess labor supply occurs, leading to higher structural unemployment levels.

Who benefits from a higher minimum wage while others face unemployment?

Those employed at the higher wage benefit, while others face structural unemployment.
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How long does structural unemployment last compared to cyclical unemployment?

It is longer-term and not due to economic cycles but policy-induced.

What is the purpose of Unemployment Insurance?

To provide financial support for individuals who lost their jobs.

What are the disadvantages of Unemployment Insurance?

It may reduce urgency to find new jobs and cause longer unemployment spells.

What are the advantages of Unemployment Insurance?

It eases job loss stress and supports basic needs during unemployment.

How should unemployment benefits be structured to balance support and incentives?

Benefits should be time-limited and lower than prior working income.

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