Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market / Robert E. Hall.

Format:

Book

Author/Creator:

Hall, Robert E.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w11183.

NBER working paper series no. w11183

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Employment Efficiency and Sticky Wages

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2005.

Summary:

I consider three views of the labor market. In the first, wages are flexible and employment follows the principle of bilateral efficiency. Workers never lose their jobs because of sticky wages. In the second view, wages are sticky and inefficient layoffs do occur. In the third, wages are also sticky, but employment governance is efficient. I show that the behavior of flows in the labor market strongly favors the third view. In the modern U.S. economy, recessions do not begin with a burst of layoffs. Unemployment rises because jobs are hard to find, not because an unusual number of people are thrown into unemployment.

Notes:

Print version record

March 2005.