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DUAL LABOR MARKET: A proposition that our economy has two classes of workers -- (1) adult white males and (2) other. The other includes, but isn't limited to, women, blacks, hispanics, and teenagers. Based on the political and economic clout of whites and the traditional notion of men as the "bread winners" of a family, white males constitute the primary labor supply and thus get the best, highest paying jobs, with the greatest chance of advancement--like executive, physician, shop foreman, or U. S. Senator. The other groups, however, are left with secondary jobs--such as secretary, janitor, nurse, or convenience store clerk--that have very low pay and limited prospects to move up. Moreover, there tends to be little movement between these two labor markets.
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Lesson 14: Aggregate Supply | Unit 5: Connections
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Page: 18 of 20
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The aggregate market has a self-correcting mechanism that ensures the long-run full-employment equilibrium will be reached by itself, without government policies. The predicament: - Long run means full employment and flexible prices.
- Short run means price rigidity without full employment.
The automatic, self-correcting solution:- Disequilibrium in the labor market exerts pressure on wages to correct the imbalance, even with wage rigidity.
- This automatically moves us from the short run to the long run and full-employment equilibrium.
The critical question: How long does the self-correcting mechanism take? Days? Months? Years?
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SELF CORRECTION, MARKET The automatic process in which markets adjust from disequilibrium to equilibrium. With this self-correction process, the market price either increases or decreases in response to a shortage or a surplus to restore the balance between quantity demanded and quantity supplied. This process works automatically to achieve equilibrium without the need for outside intervention, such as government regulation.
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Al Capone's business card said he was a used furniture dealer.
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"When you play, play hard; when you work, don't play at all. " -- Theodore Roosevelt, 26th US president
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MP
Marginal Product
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