Classical unemployment can be caused by:

Question

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All these factors can contribute to classical unemployment. Minimum wage laws can lead to employers reducing the number of workers they hire or laying off some workers if they cannot afford to pay the mandated wage rate. Union bargaining can lead to higher wages and benefits for workers, which can make it harder for firms to afford to keep all their workers. Efficiency wages are wages that are higher than what is necessary to attract workers, and can result in firms being less willing to hire as many workers as they otherwise would.

Classical Unemployment Can Be Caused By