New study shows sticky wages may drive unemployment fluctuations in the economy.
The article introduces a new way to understand why unemployment goes up and down by looking at how wages stay the same even when the economy changes. By studying data from the U.S., the researchers found that their idea fits well with how unemployment actually behaves. They estimate that during a period called the Great Moderation, the cost of these ups and downs in the economy was about 0.60% of what people usually spend.