Unemployment generated by the existence of labor unions is structural unemployment and so contributes to the natural rate of unemployment.

Question

Quizplus · Accepted Answer

Labor unions can lead to structural unemployment by negotiating wages that are above the market equilibrium, which can result in employers hiring fewer workers. This type of unemployment is considered structural because it is related to the structure of the labor markets and contributes to the natural rate of unemployment, which includes frictional and structural unemployment.

Unemployment Generated by the Existence of Labor Unions Is Structural