TY  - JOUR
AU  - Blinder,Alan S.
TI  - The Challenge of High Unemployment
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2489
PY  - 1988
Y2  - December 1988
UR  - http://www.nber.org/papers/w2489
L1  - http://www.nber.org/papers/w2489.pdf
N1  - Author contact info:
Alan S. Blinder
Department of Economics
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-3358
Fax: 609/258-5398
E-Mail: blinder@princeton.edu
AB  - It is argued that policymakers, macroeconomists and microeconomists should all take high unemployment more seriously. The shortcomings of existing theories of unemployment are discussed, and a new definition of involuntary unemployment is proposed. A model is sketched in which falling aggregate demand leads to "Keynesian" unemployment because labor is heterogeneous and relative wages matter. Microeconomic theory is criticized for assuming away unemployment and, in the process, radically changing the answers to some basic questions in trade theory and public finance. Finally, some speculative explanations are offered for the low unemployment now found in states like New Jersey and Massachusetts.
ER  -