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Article: The Conflict Between Equilibrium and Disequilibrium Theories: the Case of the U.S. Labor Market.
- Article from:
- Industrial and Labor Relations Review
- Article date:
- October 1, 1989
- Author:
CopyrightCOPYRIGHT 1989 Cornell University, ILR Review. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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The Conflict Between Equilibrium and Disequilibrium Theories: The Case of the U.S. Labor Market
Although we have known as least since John Hicks's Value and Capital (1939) that disequilibrium trades create potentially significant income effects and do not provide the information required to make welfare-maximizing decisions, most standard microeconomic analysis proceeds in terms of equilibrium models, so that market participants can be thought of as responding to equilibrium (or near-equilibrium) prices. This problem is particularly acute in the analysis of labor markets, where the evidence for lack of market-clearing (persistent unemployment and major changes in ...