Concepts of Unemployment and the Structure of Employment

Abstract

Section 1 notes that a continuing reason for dissatisfaction with the economics literature on employment is its focus on the decision-making of workers, rather than that of firms, and its neglect of shifting structures of employment. Section 2 outlines a model of endogenous change in employers' decisions on the structure of employment, in which the rate of unemployment is partly determined by the percentage of firms who follow a casualized "just in time" employment strategy, while the profitability of such a strategy increases as aggregate unemployment increases. Section 3 asks how the vocabulary of analysis of unemployment can be interpreted if firms make structural decisions on employment. Section 4 concludes that increased "labor market flexibility" may largely mean lower average real wages and greater insecurity for workers.