True or False?
The statement is true. There is no question that efficiency wage and insider-outsider theories can rationalize permanent unemployment (defined as a situation where more individuals seek employment than jobs available) in particular firms or industries. But it cannot be conclusively argued that this will cause permanent unemployment in the economy as a whole. The crucial issue is whether all industries in the economy are subject to efficiency wage or insider-outsider forces. Almost certainly this is not the case. Workers displaced from industries due to efficiency wage setting or insider-outsider pressures will simply move to unaffected industries, driving down wages there. Everyone who wants a job will ultimately have one.