D.C. Posted March 3, 2010 Report Share Posted March 3, 2010 Ok so my economic qualifications are non existent but I'm confused about something. Full employment is impossible under a free market system as it leads to a wage/price spiral of inflation, followed by recession. This bit I get. But what confuses me is the concept that unemployment is good for the economy as it suppresses wages. Surely it isn't unemployment but competition for jobs that suppresses wages? Our current system, where many low skilled workers end up becoming 'unemployable' in the eyes of HR departments (even during boom times) effectively prevents them from competing. If you never go to an interview, you can't compete by offering your labour for a lower price. How exactly are the millions of people in long term unemployment having any effect on wages? Even if they are applying for jobs, no one ever offers them an interview so they can't be affecting salary negotiation. Surely this must be driving wages up due to the need of having to pay higher taxes to support those without jobs? Quote Link to post Share on other sites
scepticus Posted March 9, 2010 Report Share Posted March 9, 2010 Our current system, where many low skilled workers end up becoming 'unemployable' in the eyes of HR departments (even during boom times) effectively prevents them from competing. If you never go to an interview, you can't compete by offering your labour for a lower price. this group of people represents permanently lost economic output, as well as a cost, and is the sign of a world system in terminal decline. How exactly are the millions of people in long term unemployment having any effect on wages? Even if they are applying for jobs, no one ever offers them an interview so they can't be affecting salary negotiation. they do compete, but only at the very low end, so their existence suppresses wages at the very low end of the jobs market. this does have knock on effects. Surely this must be driving wages up due to the need of having to pay higher taxes to support those without jobs? no, it drives taxes up, and interest rates down. Quote Link to post Share on other sites
Miss Esther Posted April 11, 2010 Report Share Posted April 11, 2010 Please i need to buy economics textbooks on Econometrics, Macroeconomics, Public finance, micro economics, developmnt, international econs etc. Which authors are recommended? Us/UK/etc. Name them Quote Link to post Share on other sites
CHF Posted April 11, 2010 Report Share Posted April 11, 2010 in case hes too shy to suggest it himself, i can recommend the above posters series of knolp! Think they might be in his sig (i use lo fi so cant see). Quote Link to post Share on other sites
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