Suppose that airline workers are laid off during a recession because of an unspoken agreement between airline workers and airline executives that wages will not be reduced. This example is consistent with the

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The example given involves an implicit agreement between workers and executives, which is the basis of the implicit contract explanation of unemployment. This explanation suggests that layoffs may occur during economic downturns because firms are hesitant to reduce wages that were previously agreed upon with workers, leading to a reduction in employment instead.

Suppose That Airline Workers Are Laid Off During a Recession