3 The fundamental assumption of neo-classical theory is that markets clear, and therefore, in the case of labour markets, there can be no unemployment. Again, this is not in keeping with reality as unemployment does exist, and often it co-exists with unfilled vacancies!
4 Neo-classical economics predicts that workers in the same occupation with the same level of ability will be paid the same wages. This is often not the case; there are differentials both between and within occupations. In an attempt to explain differentials between occupations, neo-classical economics can be made more realistic by relaxing the assumption of perfect mobility of labour.