Question

Say that firms pay a wage that is above the equilibrium wage to induce workers to...

Say that firms pay a wage that is above the equilibrium wage to induce workers to exert more effort. The resulting unemployment is



structural unemployment


frictional unemployment


None of the above/below


inexistent, there can’t be any unemployment when firms pay higher wages


the natural rate of unemployment
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Answer #1

Answer

Option 1

structural unemployment

structural unemployment is unemployment created because of the change in a structure where the quantity supplied of workers is higher than the quantity demanded and one of the reasons is higher wages or prime wages.

Frictional unemployment is unemployment there in the market at any time because of the job search and new addition to the workforce.

the natural rate of unemployment is a sum of frictional and structural unemployment.

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