According to standard economic theory, labor is a good like any other, traded on the labor market. Like with all other markets, the price for labor, which is the wage, ensures that supply meets demand. When there is a shortage of labor, the price of labor goes up, and more people offer their labor on the market. When there is an abundance of labor, a decrease in the price of labor prevents unemployment.
Economics recognizes that there is not just one market for labor, and whenever necessary, one considers special labor markets which are usually defined b...
ISET Economist Blog
A blog about economics in the South Caucasus.
Feb
18
Feb
13
The Consumer Confidence Index (CCI) attempts to capture the expectations of consumers about the future development of the economy. According to economic theory, optimistic consumers are willing to spend more money and reduce their savings, while pessimistic consumers do the opposite. This is consistent with the intuition that consumption activity and saving behavior are driven by the expectations of the future. Beyond that, the CCI can be a powerful indicator of the well-being of the economy.
WHY?
If indeed the consumption behavior is driven b...
Jul
25
In the 1990's, my brother traveled in Georgia with a friend. They were cruising around with an old van, looking for archaeological sites and other cultural heritage. Every 10 kilometers they were stopped by police who politely asked for baksheesh. My brother’s friend hated corruption, and, more significantly, had severe difficulties controlling his temper. After this pathetic annoyance was constantly going on for days, he became angry and shouted at the policemen: “Your country is the most rotten place on earth. I will never come back to Georgia and I wi...
Jun
26
Members of the same nation have the same “cultural background”, which means that they share a good deal of political and social values and ideals, and they tend to believe in the same recipes to solve their problems. Such fundamental attitudes are often shaped by the historical experiences of a nation. For example, England had a kind of merchant democracy since the 14th century, when the House of Commons was founded. In the former Ottoman Empire, on the other hand, merchants had no institutionalized possibility to influence politics. Bribery and utilizin...
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