We here can extend the list of factors that can cause a shift in the aggregate Phillipscurve:
· The match of demand and supply above the minimum wage may cause separate problems. We will discuss the issue of crowding out on the labour market below.
· Vacancies will strengthen the position of employees and their unions. Employers may nevertheless wait with filling vacancies in order to find better opportunities later.
· There is ‘forward shifting’ of the tax burden T[w] / w from employees to employers (and then into product prices).
· The Labour Cost Quotes w / y may not just affect the equilibrating wage (or expectations) but may as well cause a shift.
· Poverty - see below.
We would basically model all submarkets - with minimum wage unemployment of course only occurring at the bottom. However, let us first look at the macro level only. Let us be the summary shift variable inclusive of all factors including um. Let usr be the summary shift variable exclusive of um. Let v the rate of vacancies, TAX/WT the tax burden. Let History be the history of all variables. Then redefine f[u]:
us = us[u, v, TAX/WT, WT/Y History] = um + usr[u, v, TAX/WT, WT/Y, History]
f[u] = fu[u - us] =
