Wages and Unemployment: A Study in Non-Walrasian Macroeconomics

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Cambridge University Press, May 13, 1993 - Business & Economics - 263 pages
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This book is concerned with the problem of wage rigidities in macroeconomic theory, and their implications for public policy. It offers an analysis of the microeconomic foundations of rigid wages, considering their implications for normative economics, and their role in explaining involuntary unemployment. The initial chapters examine short-run macroeconomic equilibrium with nominal rigidities within the framework of fixed-price temporary equilibria. This is followed by an overview and assessment of the main microeconomic mechanisms likely to account for real wage rigidity. In this context new findings concerning microeconomic mechanisms likely to account for real wage rigidity, including implicit contract theory, union behaviour and efficiency wage models are reported. The effect of efficiency wages on macroeconomic fluctuations is also considered. Finally an analysis of the important public policy issues raised in the book is provided.
 

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Contents

Introduction
1
1 Price rigidities and temporary equilibrium
6
2 Wage rigidity and shortrun macroeconomic equilibrium
46
3 Real wages and the inflationunemployment dilemma
84
4 External constraint oil shock and economic policy
112
5 Implicit contracts and unions
143
6 Introduction to efficiency wage models
176
7 Efficiency wages employment fluctuations and fiscal policy
199
8 Labour market dualism efficiency wages and optimal taxation
229
Notes
247
References
254
Author index
260
Subject index
262
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