ABSTRACT
The empirical evidence on the operation of the US labor market in the postwar period from Ch. 1 provides the background against which the theoretical apparatus is developed. This chapter deals with the traditional model of the labor market as it is usually presented in textbooks or literature reviews. The emphasis here is on the macroeconomic aspects of labor-market behavior, so that elements such as investment in human capital, job-market discrimination, minimum-wage legislation, and gender differences in compensation are neglected in an attempt to concentrate on aggregated quantities of homogeneous labor services exchanged in the market at a uniform real wage.
