Martins, Pedro; Snell, Andy; Thomas, Jonathan P. - In: Scandinavian Journal of Economics 112 (2010) 4, pp. 841-863
Following insights by <link rid="b5">Bewley (1999a)</link>, this paper analyses a model with downward rigidities in which firms cannot pay discriminately based on year of entry to the firm, and develops an equilibrium model of wages and unemployment. We solve for the dynamics of wages and unemployment under...