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U.S. Inflation, Labor'S Share, and the Natural Rate of Unemployment

Gordon, Robert J. - 2021

matters for stabilization policy is the rate of inflation, not the rate of wage change. This paper provides new estimates of … result in the paper is that wage changes do not contribute statistically to the explanation of inflation. Deviations in the … growth of labor cost from the path of inflation cause changes in labor's income share, and changes in the profit share in the …

Persistent link: https://www.econbiz.de/10013218329

Friedman and Phelps on the Phillips Curve Viewed from a Half Century's Perspective

Gordon, Robert J. - 2018

price and wage setting. The positive correlation of inflation and unemployment in the 1970s and again in the 1990s is … nominal GDP, higher inflation caused by adverse supply shocks implies slower real GDP growth and higher unemployment. This … “triangle” model based on inflation inertia, demand, and supply worked well to explain why inflation and unemployment were both …

Persistent link: https://www.econbiz.de/10012913361

Employment Efficiency and Sticky Wages : Evidence from Flows in the Labor Market

Hall, Robert E. - 2021

I consider three views of the labor market. In the first, wages are flexible and employment follows the principle of bilateral efficiency. Workers never lose their jobs because of sticky wages. In the second view, wages are sticky and inefficient layoffs do occur. In the third, wages are also...

Persistent link: https://www.econbiz.de/10013218535

Workers' Trust Funds and the Logic of Wage Profiles

Akerlof, George A.; Katz, Lawrence F. - 2021

This paper defines a concept, a worker's trust fund, which is useful in analyzing optimal age-earnings profiles. The trust fund represents what a worker loses if dismissed from a job for shirking. In considering whether to work or shirk, a worker weighs the potential loss due to forfeiture of...

Persistent link: https://www.econbiz.de/10013222990

Equilibrium Unemployment as a Worker Screening Device

Nalebuff, Barry; Rodríguez-Clare, Andrés; Stiglitz, … - 2021

We present a model of the labor market with asymmetric information in which the equilibrium of the' market generates unemployment and job queues so that wages may serve as an effective screening device. This happens because more productive workers -- within any group of individuals with a given...

Persistent link: https://www.econbiz.de/10013225948

Sectoral Shifts and Unemployment in Interwar Britain

Brainard, Lael - 2021

This paper measures the importance of sectoral shifts, as against aggregate shocks and changes in search intensity, in explaining the persistent high unemployment that prevailed in interwar Britain. It develops a new measure of sectoral shifts that captures the arrival of information about...

Persistent link: https://www.econbiz.de/10013227511

Why Do Countries Subsidize Investment and Not Employment?

Fuest, Clemens; Huber, Bernd - 2021

The governments of nearly all industrialised countries use subsidies to support the economic development of specific sectors or regions with high rates of unemployment. Conventional economic wisdom would suggest that the most efficient way to support these regions or sectors is to pay employment...

Persistent link: https://www.econbiz.de/10013234374

Waiting for Work

Akerlof, George A.; Rose, Andrew; Yellen, Janet L. - 2021

This paper explains upward job mobility and observed patterns of unemployment by skill as an economy recovers from a recession. Skilled unemployment is due to rational waiting by workers looking for long-term jobs when there is a "lock-in" effect. Lock-in occurs if the conditions in the labor...

Persistent link: https://www.econbiz.de/10013235582

The Thick Market Effect on Local Unemployment Rate Fluctuations

Gan, Li; Zhang, Qinghua - 2021

This paper studies how the thick market effect influences local unemployment rate fluctuations. The paper presents a model to demonstrate that the average matching quality improves as the number of workers and firms increases. Unemployed workers accumulate in a city until the local labor market...

Persistent link: https://www.econbiz.de/10013236831

Efficiency Wage Theories : a Partial Evaluation

Katz, Lawrence F. - 2021

This paper surveys recent developments in the literature on efficiency wage theories of unemployment. Efficiency wage models have in common the property that in equilibrium firms may find it profitable to pay wages in excess of market clearing. High wages can help reduce turnover, elicit worker...

Persistent link: https://www.econbiz.de/10013239372