Sunday, October 2, 2011

Productivity, Structural Unemployment & Creative Destruction

As we know, cyclical unemployment can become structural if prolonged. And as labor costs rise, there is an incentive for firms to increase the capital/labor ratio rather than hire workers. This can be part of the process of creative destruction. It's all explained rather well in this blog post at The Wall Street Journal.

What I like about the post is that it is short yet very clear. I would think you might want to use with your students as a discussion starter at the beginning of the period or to summarize a day's activity.

1 comment:

Mike Fladlien said...

I believe that as technology speeds along at the speed of light, structural unemployment at about 9% will become the new natural rate of unemployment.

Thank you for recommending Grand Pursuit. It is one of the best books I have read this year.