When job search is the explanation for unemployment, workers are searching for the jobs that best suit their tastes and skills, but when the wage is above the equilibrium level, the quantity of labor supplied exceeds the quantity of labor demanded, and workers are unemployed because they are waiting for jobs to open up.

Question

Quizplus · Accepted Answer

This statement describes two scenarios of unemployment: frictional unemployment, where workers are searching for jobs that match their skills and preferences, and structural unemployment, where wages are above the equilibrium level leading to an excess supply of labor over demand, causing some workers to remain unemployed.

When Job Search Is the Explanation for Unemployment, Workers Are