classical unemployment

Noun

classical unemployment (uncountable)

1. The component of overall unemployment caused by too high wage expectations.
   • There can be "Keynesian" and "classical" unemployment. Indeed there can be both at the same time: the real wage might be too high to allow full employment with existing capital stock, while at the same time aggregate demand is inadequate to take off the market what firms would wish to produce....1987 8 December, Nobel laureate Robert M. Solow in his prize lecture
   • In the standard fix-price model of price-taking competitive firms, Keynesian and classical unemployment are separate states according to whether notional product supply exceeds or falls short of market demand at the prevailing wage and price configuration, so that labor demand is either output...1988, Robert M. Coen, Bert G. Hickman., “Is European Unemployment Classical or Keynesian?”, in The American Economic Review, volume 78, number 2, pages 188–193