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The Consequences of Rigid Wages in Search Models / Robert Shimer.
- Format:
- Book
- Author/Creator:
- Shimer, Robert.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w10326.
- NBER working paper series no. w10326
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2004.
- Summary:
- The standard theory of equilibrium unemployment, the Mortensen-Pissarides search and matching model, cannot explain the magnitude of the business cycle fluctuations in two of its central elements, unemployment and vacancies. Modifying the model to make the present value of wages unresponsive to current labor market conditions amplifies fluctuations in unemployment and vacancies by an order of magnitude, significantly improving the performance of the model. Despite this, the welfare consequences of such rigid wages is negligible.
- Notes:
- Print version record
- February 2004.
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