Rate Wage Recommendation and Form

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in this video we're going to talk about which sitting and price sitting in the labor market the key topic is how wages prices and the unemployment rate are all determined together let's begin with wage sitting the wage setting equation is W equal to PE times a function f uz and in a little more detail W is the nominal wage PE is the expected expected price level and U is the unemployment rate Z are all other shift factors such as unemployment insurance minimum wages broadly speaking the institutional arrangements of the labor market now what does this mean it means that normal wages are increase with expect the expected price level that's right like this so if they're if the expected price level increases wage demands normal wage demands will rise why is that well workers and salaried employees care not about the normal rage but about their real wage namely the ratio of the nominal wage to the price level we want to know what our paycheck is worth in the store and not what number is wr