Skip to main content

Unemployability and involuntary unemployment

  • Chapter
A Theory of Employment in Firms

Part of the book series: Contributions to Economics ((CE))

  • 96 Accesses

Abstract

People differ in their abilities. They may be quicker or slower and make one or ten pins in a day, or rather one or ten units of specialized tasks in Adam Smith’s pin factory. They may be more or less qualified in text processing and type one or five letters in an hour. Such differences produce wage inequality if labor is paid according to its individual contribution. But they do not lead to an unemployment problem as long as wages are flexible. If no worker is available who can carry out ten units of a task in a unit of time, firms employ two workers who carry out five units and pay them the half wage. However, modern production and organization of work is more complicated. Autonomous problem solving and non-routinized interactions with other members of the firm or with customers are required. Workers who are not able to do reliable work without permanent guidance, people who have difficulties to help themselves when confronted with a new situation, or individuals who find it hard to communicate or to use modern means of communication cannot be easily integrated into making business in modern firms. There is no principal limitation to employ these less able workers. The point is that their employment requires more supervision, training and coordination. Only to the extent that firms do not provide these prerequisites, the less able workers cannot be productively employed. Chapter 2 has worked out this point in an abstract model. It shows that indeed involuntary unemployment is possible in the macroeconomic equilibrium of a competitive economy, if the requirements of organizing work are taken into account.

This is a preview of subscription content, log in via an institution to check access.

Access this chapter

Subscribe and save

Springer+ Basic
EUR 32.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 39.99
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
Softcover Book
USD 54.99
Price excludes VAT (USA)
  • Compact, lightweight edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

Author information

Authors and Affiliations

Authors

Rights and permissions

Reprints and permissions

Copyright information

© 2002 Springer-Verlag Berlin Heidelberg

About this chapter

Cite this chapter

Falkinger, J. (2002). Unemployability and involuntary unemployment. In: A Theory of Employment in Firms. Contributions to Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2649-4_3

Download citation

  • DOI: https://doi.org/10.1007/978-3-7908-2649-4_3

  • Publisher Name: Physica, Heidelberg

  • Print ISBN: 978-3-7908-1520-7

  • Online ISBN: 978-3-7908-2649-4

  • eBook Packages: Springer Book Archive

Publish with us

Policies and ethics