ABSTRACT
This chapter presents an overview of the major theories which describes the working of labour market. It explains the leading strands of the economic causes of unemployment. The chapter identifies for the reader what the different theories say about the causes of unemployment and then link that discussion to an examination of the causes of unemployment in Colombia. Theories have been considered that apply both to developing and to developed countries because the countries at different stages of development have different settings for their common problems. The chapter discusses the theories that deals with the labour market in temporal order. R. Solow suggests that monetarists are Walrasian because they believe that involuntary unemployment does not exist since the unemployed offer themselves at a wage lower than that received by the employed, and employers recruit at the lower wage even if it means rehiring all the work force again.
