ABSTRACT
One answer is the economist's catch-all excuse for all failures to pro vide a satisfactory explanation of observed phenomena: imperfections i n the market, i n this case in the form of " r ig id" or "inflexible" wages. I n its simplest form, as i n Figure 12.1, the assertion is that, while a wage rate W 0 would clear the market wi th E 0 units of labor employed, there is some im perfection that prevents the wage rate from falling below W r , at which wage rate W r U units of labor are employed; UB unemployed, of which U A is the excess of the " f u l l " employment level over the actual level, and AB the additional units available for employment at a wage of W T T rather than W 0 .
