Why labour markets don't clear



New Keynesians argue that sticky wages prevent labour markets from clearing. I disagree - I think labour markets can eventually clear. But we don't allow them to do so, because the social costs of are far too high. At Pieria, I explain why this is. Read the whole article here.


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  1. This comment has been removed by the author.

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  2. Goods and services are expendable, people are not , and so a truly free market in goods , services and labour can't be.
    On the subject of absolutes , unemployment is a feature not of a poor country but of a rich one, a country can only have a permanent unemployment level if it can afford it.
    As for the clustering I have heard that wages for bar staff work went down after the minimum wage was introduced.

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  3. With capitalism, people are definitely expendable.

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