Involuntary Job Loss Event

An Involuntary Job Loss Event is a Job Loss Event that is an Involuntary Event.

• AKA: Involuntary Unemployment.
• Context:
  • It can (typically) be due to an Unemployment Cause.
  • It can (typically) produce an Unemployed Worker.
  • …
• Counter-Example(s):
  • a Voluntary Job Loss Event.

See: Job Destruction Event, Reservation Wage, Supply And Demand, Implicit Contract Theory, Disequilibrium Macroeconomics, Efficiency Wages.

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References

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/involuntary_unemployment Retrieved:2014-1-19.
  • Involuntary unemployment occurs when a person is willing to work at the prevailing wage yet is unemployed. Involuntary unemployment is distinguished from voluntary unemployment, where workers choose not to work because their reservation wage is higher than the prevailing wage. In an economy with involuntary unemployment there is a surplus of labor at the current real wage. Involuntary unemployment cannot be represented with a basic supply and demand model at a competitive equilibrium: All workers on the labor supply curve below the market wage would voluntarily choose not to work, and all those above the market wage would be employed. Given the basic supply and demand model, involuntarily unemployed workers lie somewhere off of the labor supply curve.Template:Sfn Economists have several theories explaining the possibility of involuntary unemployment including implicit contract theory, disequilibrium theory, staggered wage setting, and efficiency wages.Template:Sfn

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/unemployment#Definitions Retrieved:2014-1-19.
  • … Though there have been several definitions of "voluntary" and “involuntary unemployment” in the economics literature, a simple distinction is often applied. Voluntary unemployment is attributed to the individual's decisions, whereas involuntary unemployment exists because of the socio-economic environment (including the market structure, government intervention, and the level of aggregate demand) in which individuals operate. In these terms, much or most of frictional unemployment is voluntary, since it reflects individual search behavior. Voluntary unemployment includes workers who reject low wage jobs whereas involuntary unemployment includes workers fired due to an economic crisis, industrial decline, company bankruptcy, or organizational restructuring. On the other hand, cyclical unemployment, structural unemployment, and classical unemployment are largely involuntary in nature. However, the existence of structural unemployment may reflect choices made by the unemployed in the past, while classical (natural) unemployment may result from the legislative and economic choices made by labour unions or political parties. So, in practice, the distinction between voluntary and involuntary unemployment is hard to draw. The clearest cases of involuntary unemployment are those where there are fewer job vacancies than unemployed workers even when wages are allowed to adjust, so that even if all vacancies were to be filled, some unemployed workers would still remain. This happens with cyclical unemployment, as macroeconomic forces cause microeconomic unemployment which can boomerang back and exacerbate these macroeconomic forces.

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