Minimum-wage laws,unions,and efficiency wages contribute to
A)both structural unemployment and the natural rate of unemployment.
B)neither structural unemployment nor the natural rate of unemployment.
C)structural unemployment,but not the natural rate of unemployment.
D)the natural rate of unemployment,but not structural unemployment.

Question

Quizplus · Accepted Answer

All three factors can contribute to an increase in the natural rate of unemployment, which is the rate of unemployment that exists when the labor market is in equilibrium and there is no cyclical unemployment. Minimum-wage laws can lead to unemployment by making it more expensive for employers to hire workers, especially low-skilled workers. Unions can lead to wage increases that make it harder for firms to hire as many workers, leading to unemployment. Efficiency wages are wages that are above the market-clearing level, and can lead to lower turnover rates and higher productivity, but also to unemployment if firms are forced to lay off workers or reduce hiring to maintain those wages. All of these factors can contribute to structural unemployment, which is unemployment that arises from a mismatch between the skills and qualifications of workers and the needs of employers.

Minimum-Wage Laws,unions,and Efficiency Wages Contribute to