The Labor Market: Workers, Wages, and Unemployment

A set of vocabulary flashcards containing terms and their definitions related to labor market trends, wages, and unemployment challenges.

Real Wage Growth

Increase in wages adjusted for inflation; significant growth observed in 20th century.

Wage Stagnation

Period of little to no growth in real wages, notably seen from 1973 onward.

Wage Inequality

Disparities in income levels among workers, particularly between high-skilled and low-skilled jobs.

Workers' Reservation Wage

The minimum wage a worker would accept for a specific job, reflecting the opportunity cost of leisure.

Value of Marginal Product (VMP)

The additional revenue generated by hiring one more worker, which influences labor demand.

Frictional Unemployment

Short-term unemployment occurring when workers are between jobs, often resulting in increased economic efficiency.

Cyclical Unemployment

Unemployment that rises during economic downturns, closely linked with phases of the business cycle.

Structural Unemployment

Long-term unemployment resulting from mismatches between workers’ skills and market needs, also affected by labor market regulations.

Unemployment Insurance

Government program that provides financial assistance to unemployed workers, designed to mitigate the costs of unemployment.

Skill-Biased Technological Change

Advancements in technology that disproportionately benefit skilled workers, leading to greater income inequality.