Intro Macroeconomics Unit 9 - Labour Market

Labour Market

The interaction between workers seeking employment and employers seeking workers.

Labour force

The total number of people who are available to work, which includes both the employed and the unemployed.

Unemployed

Individuals who are not in paid employment, available for work, and actively seeking work.

Employment Rate

The percentage of the working-age population that is employed.

Unemployment Rate

The percentage of the labour force that is unemployed.

Inactivity Rate

The proportion of the working-age population that is not in the labour force.

Wage-setting Curve

A curve that illustrates the real wage necessary to provide workers with incentives to work at different levels of employment.

Price-setting Curve

A curve that represents the real wage firms pay when they choose their profit-maximizing price.

Labour Market Equilibrium

The point where the wage-setting and price-setting curves intersect, indicating the optimal wage and employment level.

Exogenous Factors

External factors that can shift the wage-setting curve, such as changes in unemployment benefits.

Endogenous Factors

Variables that are determined by the model, such as employment and unemployment rates.

Labour Discipline Model

A framework that explains how employment rates and wages interact based on workers' incentives to work.

Nash Equilibrium

A situation in which all parties are optimizing their outcomes, given the strategies of others, commonly found at the intersection of wage-setting and price-setting curves.