JOURNAL OF POLITICAL ECONOMY of spatial mismatching among jobs and people. In the formal model I shall exclude serious bottlenecks in one or more kinds of labor in order to speak vacancy rate as if they were pretty much uniform over the spectrum of workers and jobs As defined here aggregate unemployment, "denoted U, consists of both those individuals without employment who are actively seeking a job (at going real wage rates) and the more passive without work who would accept a job opportunity (at the going rate) were it known to them Aggregate job vacancies, "denoted V, consist both of those jobs which employers are actively seeking at a cost to fill and of the quantity of un filled jobs that would be filled if and only if workers presented themselves without recruitment cost to the firm. Though it is doubtful that"active unemployment and vacancies are equivalent, respectively, to"passive unemployment and vacancies in their consequences for wage rates, I merge these active and passive components for simplicity. I Letting n denote the number of persons employed we have as a defini tion of labor supply, L, the relation L=N+U (1) Labor demand, Np, is defined by L may depend upon the usual factors like the real wage rate, income, wealth, and demographic factors; Np may depend on the technology, the product wage(net of interest and"depreciation"on the investment out- lays to process and train a new employee), the degree of monopoly power, and, if prices do not clear the commodity markets, upon aggregate demand o The concept of"excess demand"for labor, denoted x, is usually fined (3) The usual excess-demand theory of money-wage dynamics states that the proportionate rate of change of the money wage is proportional to the excess demand rate, denoted x. The latter is excess demand per unit of labor supply, and hence equal to the excess of the vacancy rate, v, over the x=U-u, x=XL, U=VL, u=UL e. I1 Econometric analysis by Simler and Tella(1967)shows total unemployment to plain wage movements than active or"measured"unemployment alone.684 JOURNAL OF POLITICAL ECONOMY of spatial mismatching among jobs and people. In the formal model I shall exclude serious bottlenecks in one or more kinds of labor in order to speak aggregatively of "the" wage rate, "the " unemployment rate, and "the" vacancy rate as if they were pretty much uniform over the spectrum of workers and jobs. As defined here, "aggregate unemployment," denoted U, consists of both those individuals without employment who are actively seeking a job (at going real wage rates) and the more passive without work who would accept a job opportunity (at the going rate) were it known to them. "Aggregate job vacancies," denoted V, consist both of those jobs which employers are actively seeking at a cost to fill and of the quantity of un￾filled jobs that would be filled if and only if workers presented themselves without recruitment cost to the firm. Though it is doubtful that "active" unemployment and vacancies are equivalent, respectively, to "passive" unemployment and vacancies in their consequences for wage rates, I merge these active and passive components for simplicity.ll Letting N denote the number of persons employed, we have as a defini￾tion of labor supply, L, the relation Labor demand, ND,is defined by L may depend upon the usual factors like the real wage rate, income, wealth, and demographic factors; ND may depend on the technology, the product wage (net of interest and "depreciation" on the investment out￾lays to process and train a new employee), the degree of monopoly power, and, if prices do not clear the commodity markets, upon aggregate demand as well. The concept of "excess demand" for labor, denoted X, is usually defined as when The usual excess-demand theory of money-wage dynamics states that the proportionate rate of change of the money wage is proportional to the excess demand rate, denoted x. The latter is excess demand per unit of labor supply, and hence equal to the excess of the vacancy rate, v , over the unemployment rate, u: " Econometric analysis by Simler and Tella (1967) shows total unemployment to explain wage movements better than active or "measured" unemployment alone