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And a pool of unemployed workers limits the competitive pressure to raise wages.
The large and growing pool of unemployed workers would place downward pressure on nominal wages, and that, in turn, could trigger an eventual switch to lower productivity, labour-intensive methods.Unless, that is, demand was booming.
The former provides an approximation to labor demand while the composition of the pool of unemployed workers provides a proxy for the characteristics of labor supply.
This, first, diminishes the magnitude of the positive effects resulting from the other two measures just described and, second, may induce firms to dismiss relatively unproductive workers more frequently and to search for more productive ones in the pool of unemployed workers, even though this is costly.
One argument against longer unemployment benefits, namely that they decrease search intensity, is weaker in a severe recession: When vacancies are scarce relative to the pool of unemployed workers, any job not taken up by one worker (because of provision of unemployment benefits) is quickly filled by another.
Similar(55)
With Connecticut having one of the nation's lowest numbers of unemployed workers -- the usual pool for substitute teachers -- this all spells trouble when it comes to replacing any of the state's 45,000 teachers, Tom Murphy, the spokesman for the state Department of Education, said.
During the downturn, millions of unemployed workers obviously weren't plowing money into their 401 k)s.
It has left an unprecedented degree of unemployed workers and underused factories in its wake.
"Twenty-one percent of unemployed workers with a bachelor's degree have been without work for a year or longer," the report found, "compared to 27 percent of unemployed high school graduates and 23 percent of unemployed high school dropouts".
Civil unrest orchestrated by thousands of unemployed workers could increase fears of financial distress.
The sheer size of the continent's growing army of unemployed workers is difficult to comprehend.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com