Labor Economics Glossary

A graphical representation of the negative relationship between the unemployment rate and the job vacancy rate.

The negotiation process between employers and a group of employees aimed at reaching agreements to regulate working conditions.

A difference in wages that compensates workers for non-monetary differences between jobs, such as risk, difficulty, or unpleasant conditions.

Unemployment caused by downturns in the business cycle when aggregate demand for goods and services is insufficient.

The demand for labor that arises from the demand for the goods and services that labor produces.

Wages set above the market-clearing level by firms to boost productivity, reduce shirking, lower turnover, and attract higher-quality applicants.

A measure of the responsiveness of the quantity of labor demanded to changes in the wage rate.

Temporary unemployment resulting from the time it takes workers to search for and find new jobs.

A labor market characterized by short-term, flexible, freelance, or independent contractor work rather than traditional permanent employment.

The knowledge, skills, and abilities that workers acquire through education, training, and experience, which increase their productivity and earning potential.

The change in labor supply resulting from a change in income; higher wages increase income, which may lead workers to consume more leisure.

The total number of workers that firms are willing to hire at a given wage rate, determined by the marginal revenue product of labor.

The total number of hours that workers are willing and able to work at a given wage rate.

An organized association of workers formed to protect and advance their rights and interests through collective bargaining.

The additional revenue generated by employing one more unit of labor, equal to the marginal product of labor times marginal revenue.

A legally mandated lowest hourly wage that employers may pay workers.

A market structure in which there is only one buyer of labor, giving that employer wage-setting power.

The unemployment rate that exists when the economy is at full employment, including only frictional and structural unemployment.

The concentration of particular demographic groups in specific occupations, often contributing to wage inequality.

An empirical relationship showing an inverse short-run tradeoff between unemployment and wage or price inflation.

The minimum wage at which a worker is willing to accept a job offer.

The use of observable characteristics such as education to convey information about unobservable qualities like ability to employers.

Unemployment arising from a mismatch between workers' skills or locations and the requirements of available jobs.

The change in labor supply resulting from a change in the relative price of leisure; higher wages make leisure more expensive, encouraging more work.

The practice of paying different wages to workers with equal productivity based on personal characteristics unrelated to job performance.