Exploring Inequality in Europe: Diverging Income and

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People moving from one job to the next are said to be frictionally unemployed. Okun's law may not be entirely predictive, but it again helps frame the discussion of economic growth and how employment influences it and vice versa. For one thing, demand-side unemployment may be a slippery slope. Long-run NAIRU is defined as the rate of unemployment at which inflation stabilises once any short run shocks have worked their way out the macro-economy. The long-term implication was that there is a “natural” unemployment rate that reflects the underlying microeconomic structure of labor supply and labor demand, and any attempts by fiscal and monetary authorities to drive unemployment below this equilibrium generate ever increasing rates of inflation.

Pages: 256

Publisher: Edward Elgar Pub (June 30, 2016)

ISBN: 1783476656

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