Abstract
Under conventional neoclassical analysis the labour market is in equilibrium when the real wage rate is such that the demand for labour equals the supply of labour and the market clears. This equilibrium is consistent with full employment in that nobody willing to work at the equilibrium wage will remain unemployed. If there is an exogenous shift in either demand or supply then the real wage rate will adjust to eliminate any excess demand for, or supply of, labour.
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© 1989 Martin Timbrell
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Timbrell, M. (1989). Contracts and Market-Clearing in the Labour Market. In: Greenaway, D. (eds) Current Issues in Macroeconomics. Current Issues in Economics. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-20286-7_4
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DOI: https://doi.org/10.1007/978-1-349-20286-7_4
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-333-45345-2
Online ISBN: 978-1-349-20286-7
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