What is real wage/classical unemployment primarily attributed to?

Real wage/classical unemployment is primarily attributed to minimum wage laws that create a wage floor. When the government sets a minimum wage above the equilibrium wage that would otherwise prevail in the labor market, it can lead to a surplus of labor — meaning that the quantity of labor supplied exceeds the quantity of labor demanded. This situation results in employers hiring fewer workers than they would at a lower wage, leading to unemployment among those who are willing to work at lower wage rates.

Minimum wage laws, while intended to protect workers' incomes, can also create rigidities in the labor market. Employers may hire fewer employees or reduce hours to manage costs, which contributes to higher unemployment rates, particularly among low-skilled workers. Additionally, some individuals may find it difficult to gain employment because they have skills that do not meet the higher wage standards set by these laws.

Understanding this concept helps clarify the relationship between wages set by policy and the dynamics of labor supply and demand, emphasizing the trade-offs involved in efforts to increase income levels for workers.