Sticky wage, efficiency wage and Keynesian unemployment
Document Type
Journal article
Source Publication
Pacific Economic Review
Publication Date
5-1-2007
Volume
12
Issue
2
First Page
213
Last Page
224
Abstract
This paper provides a model of involuntary unemployment by combining the insights of the sticky wage theory and the efficiency wage theory. It implies that employed workers tend to supply more effort in response to economic downturns. Thus, a negative shock to an economy has intriguing impacts on the unemployment. The model also shows that a negative demand shock may have a relatively small effect on output since changes in work effort serve to partially mitigate the effects of the shock. Moreover, it yields some implications that complement the existing 'work sharing' literature.
DOI
10.1111/j.1468-0106.2007.00350.x
Print ISSN
1361374X
E-ISSN
14680106
Publisher Statement
Copyright © 2007 Blackwell Publishing Ltd
Access to external full text or publisher's version may require subscription.
Full-text Version
Publisher’s Version
Language
English
Recommended Citation
Fan, C. S. (2007). Sticky wage, efficiency wage and Keynesian unemployment. Pacific Economic Review, 12(2), 213-224. doi: 10.1111/j.1468-0106.2007.00350.x