The main movements of unemployment correspond to fluctuations in the short-run non-accelerating-inflation rate of unemployment (around a stable long-term non-accelerating-inflation rate of unemployment). These supply-side fluctuations have two main origins: (1) variations in the number of...

The authors show how (in the context of a steady inflation rate) a tax-based incomes policy reduces the NAIRU. This is so in a one-sector world of involuntary unemployment, based on efficiency wages or decentralized union bargaining. It holds in a two-sector world in which there is a secondary...