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Pastimes : Austrian Economics, a lens on everyday reality
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To: gpowell who wrote (228)5/11/2003 1:01:01 PM
From: Don Lloyd  Read Replies (1) of 445
 
gpowell,

Here is a critical review of a book that purported to explain cyclical unemployment. It might provide some background info on the discussion (nice reference section at the end as well).

Thanks. I'm left with the impression that the arguments are mis-focused. I perceive a difference between saying that the government is causing a problem by raising wages and that the government is causing a problem by impeding the adjustment of wages to market circumstances.

Whatever.

From DeLong -

"...When the business cycle turns downward, the jobs that disappear are disproportionately low-wage jobs held by the lesser-skilled. The jobs that remain pay, on average, more. So the shifting cyclical composition of employment generates the appearance of a countercyclical pattern in real wages: the average real wage rises in recessions because more of the low-paid have lost their jobs...."

This seems to be in accordance with my previously expressed expectations, but, of course, may or may not be true.

Regards, Don
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