Economics, Econometrics and Finance
8 years ago

Unemployment Persists Despite Wage Adjustments, Efficiency Wage Models Fail to Explain

2 views
Economic Inquiry
EFFICIENCY WAGE MODELS OF UNEMPLOYMENT‐ONE VIEW
Heather Carmichael

Paper Summary

Persistent wage rigidity and involuntary unemployment are common issues in economies. Efficiency wage models have been proposed to explain why wages don't adjust to clear the labor market. However, these models fail to account for wage rigidity and persistent unemployment.

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