Suppose there are two economies, A and B. Economy A suffers from a high degree of skills mismatch between workers and firms, while the mismatch problem is less severe for Economy B. Then the steady-state unemployment rate is higher in Economy A than in Economy B, because the fraction of employed workers who lose their jobs and become unemployed is higher in Economy A than in Economy B.
Suppose there are two economies, A and B. Economy A suffers from a high degree of skills mismatch between workers and firms, while the mismatch problem is less severe for Economy B. Then the steady-state unemployment rate is higher in Economy A than in Economy B, because the fraction of employed workers who lose their jobs and become unemployed is higher in Economy A than in Economy B.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Suppose there are two economies, A and B. Economy A suffers from a high degree of skills mismatch between workers and firms, while the mismatch problem is less severe for Economy B. Then the steady-state
unemployment rate is higher in Economy A than in Economy B, because the fraction of employed workers who lose their jobs and become unemployed is higher in Economy A than in Economy B.
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