Chapter

Non‐Monetary Theories of Unemployment Fluctuation: The Structuralist School

Edmund S. Phelps

in Seven Schools of Macroeconomic Thought

Published in print May 1990 | ISBN: 9780198283331
Published online November 2003 | e-ISBN: 9780191596766 | DOI: http://dx.doi.org/10.1093/0198283334.003.0007

Series: Ryde Lectures

 Non‐Monetary Theories of Unemployment Fluctuation: The Structuralist School

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This chapter and the previous one review two schools of thought on the role of non‐monetary forces acting through non‐monetary channels in the generation of macroeconomic fluctuations. The subject in this chapter is the ‘structuralist school’, which views changes in unemployment as the outcome of shifts in the structural characteristics of the economy. The structuralists offer a theory of a sort of real wage ‘rigidity’ in which a downward shock to labour demand forces a decrease in employment, thus an increase in unemployment. The structuralist school also points to a rich variety of operating assets used in production, such as customers and employees as well as plant and equipment, with the result that there no longer exists an aggregate production function to which the demand for labour is tightly connected.

Keywords: economic structure; economic theory; macroeconomics; non‐monetary theory; reviews; structuralist school; unemployment

Chapter.  5056 words. 

Subjects: Macroeconomics and Monetary Economics

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