Title

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

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