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Unemployment Out of Nowhere

23 Pages Posted: 14 Jul 2011 Last revised: 26 May 2015

Egmont Kakarot-Handtke

University of Stuttgart - Institute of Economics and Law

Date Written: July 14, 2011

Abstract

Unemployment is usually explained with reference to the equilibrium of supply and demand in the labour market. This approach rests on specific behavioral assumptions that are formally expressed as axioms. The standard set of axioms is replaced in the present paper by a set of structural axioms. This approach yields the objective determinants of employment. They consist of effective demand, the actual outcome of price formation, structural stress as determined by the heterogeneity within the business sector and the income distribution. Sudden changes of employment are effected by latent relative switchers that are hard to spot empirically.

Keywords: new framework of concepts, structure-centric, axiom set, full employment, employment–profit ratio trade-off, causality, economic law, historical specificity, latent relative switcher

JEL Classification: E12, E24

Suggested Citation

Kakarot-Handtke, Egmont, Unemployment Out of Nowhere (July 14, 2011). Available at SSRN: https://ssrn.com/abstract=1885544 or http://dx.doi.org/10.2139/ssrn.1885544

Egmont Kakarot-Handtke (Contact Author)

University of Stuttgart - Institute of Economics and Law ( email )

Keplerstrasse 17
Stuttgart
Germany

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