Labor Economics · intro
What moves on the Bathtub Model of Unemployment diagram
A higher separation rate raises inflows at every u, lifting steady-state unemployment.
Start at the steady statesteady stateThe resting point of a growth model, where capital per worker stops changing because investment exactly covers depreciation and dilution..
An industry collapse raises the separation rate, the inflow line lifts.
More workers pour into the pool each month; u* rises until the faster drain catches up.
Examiners ask this as: layoffs separation rate, job losses wave.
Other scenarios on Bathtub Model of Unemployment