Increased unemployment causes increase or decrease in real wage Watch

snoopyx
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Jasminge
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i'd say it lowers because more people are desperate for work so this means firms can pay them low wages and people won't leave their jobs. and i THINK the supply curve shifts forward resulting in a fall wage levels

sorry, i'm probably wrong, just a nooby AS economics students here :P
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Nightvision
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Post above is correct but in reality it may not effect 'real' wages, as this is all to do with inflation, if there is a situation where unemployment increases but there is also deflation (has happened in places in the recent crisis) then there may be no change in real wages or they may actually rise! In general though it is safe to assume that the economy not being at full output means demand pull inflation is reduced so yes real wages will fall.
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silverbolt
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one of things companies do is make people redundant, a post is then advertised for the same position doing the same work with a few tweaks and on a different (lower) wage and with a different job title. They also increase the workload of staff, so thats one way of looking at it. Your doing extra work for the same pay.

During a recession employers get a buyers market situation, so many people lookin for work including those who are overly qualified for the role, so they can save money by lowering the take in wage of new employees
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zedeneye1
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lowers wages
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History-Student
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(Original post by silverbolt)
one of things companies do is make people redundant, a post is then advertised for the same position doing the same work with a few tweaks and on a different (lower) wage and with a different job title. They also increase the workload of staff, so thats one way of looking at it. Your doing extra work for the same pay.

...
My place did exactly that. Did a big company wide presentation about the ways they're going to survive the economy atm. It involved sacking 2 researchers.

Next day the had an advert up for 2 new research posts that recently opened up on 16k/year rather than the ~39k they were on the day before.
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Mr. Inquisitive
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What if the real wage decreases, does unemployment increase and why?
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