- First Reason: the time it takes to search for jobs that best suit tastes and skills
- Fourth Reason: theory of efficiency wages
- High wages can...: improve worker health, lower worker quality, and increase worker effort
- Minimum Wage Laws: raises wage of unskilled workers therefore raising the quantity of labor supplied and reduce the quantity demanded
- Second Reason: minimum wage laws
- Theory of Efficiency Wages: firms find it profitable to pay wages above equilibrium level.
- Third Reason: Market power of unions, pushes union wages up and creates surplus of labor
Unemployment