New theory reveals why high unemployment persists, challenges existing economic beliefs.
High unemployment is a serious issue that needs more attention from policymakers and economists. Existing theories on unemployment have limitations, so a new definition of involuntary unemployment is suggested. A model is presented where a drop in demand leads to Keynesian unemployment due to differences in labor and wages. Microeconomic theory is criticized for overlooking unemployment, which affects trade and public finance theories. Some reasons for low unemployment in states like New Jersey and Massachusetts are also discussed.