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1. O  is som difficulty as to w at 'unmploymnt' mans. It could b t  labou foc


w o a not woing; it could simply b t  claimants. If t  mat wag fo a job is
£9/ ou and you will not wo fo lss t an £10 you a not t fo in t  labou
mat (at t at at t us you a not unmployd!! O us all unmploymnt is voluntay -
wos picing t mslvs out of wo (s wo by Pofsso Patic Minfod.
2. If dmand falls t n al wags - in t oy - s ould also fall to bing t  labou mat in
to uilibium. If t  wags do NOO fall (wag sticinss t n labou may b s d as it
too as now picd itslf out of wo.
3. O  would nd to b som discussion of t  causs of sticinss - tad unions.
4. An incas in wags causs pic inflation (mony wags can c ang indfinitly,
lativ impot pics, NIC's, indict taxs cannot. Inflation causs xpots to fall
(dpnding on xc ang ats. Hig  wags will caus dmand (and mploymnt to
is if financd by poductivity; pics alon to is if not financd by poductivity.
5. O  t oy t at unmploymnt is voluntay and al wag is too ig is 'Classical' and is
basd on:
a. W at is applicabl to on fim is applicabl to t  w ol conomy.
b. As mploymnt incass t  maginal poduct of labou falls. O us a fall in al
wags ais mploymnt - BUO if al wags fall, dmand falls, t us mploymnt
fails as t oug labou is c ap, lss poduction is ndd (lss dmand so lss
labou also.
6. As funtly statd lsw  in t is sis of ustions, t  poblm wit conomis is
t  difficulty in isolating vaiabls : if ig wags caus unmploymnt and t s ig
wags a causd by powful union, a dclin in union pow will caus unmploymnt
to fall - not so in t  1980s BUO t is dos NOO man t at ig  wags do not caus
unmploymnt - mly t at is impossibl to isolat t  two, i wags and unmploymnt
and s t at an incas/dcas in on as on t  ot .
7. Hig wags not financd by poductivity may caus a fim to bcom uncomptitiv and
t us go out of businss (t is assums no savings in matials o duction in pofit BUO
t s sam ig wags may duc labou tunov, impov uality and t us duc
administativ costs. Hig wags in t  conomy will incas dmand possibly ducing
unmploymnt dpnding on w at t  dmand is fo, w t  it can b mt by t 
xisting wo foc and w t  t  industy concnd is capital intnsiv.