When there is structural unemployment, the real wage is:
A) rigid at a level below the market-clearing level.
B) rigid at the market-clearing level.
C) rigid at a level above the market-clearing level.
D) flexible.

Question

Quizplus · Accepted Answer

Structural unemployment occurs when there is a mismatch between the skills that workers in the economy can offer and the skills demanded by employers. This often leads to real wages being rigid at a level above the market-clearing level, as wages do not adjust downward due to various factors such as minimum wage laws, labor unions, or long-term contracts, leading to a surplus of labor (unemployment).

When There Is Structural Unemployment, the Real Wage Is