Wage Formation and the Persistency of Unemployment
1986 (English)Report (Other academic)
This paper suggests a reason why in an economy with nominal wage contracts, the effects of monetary shocks persist after labor contracts have been renegotiated. The basic idea isthat employed and unemployed workers have diverging interests. Since employed workeres for a majority of union membership, union decisions are likely to favor the interest of those employed. A monetary shock affects employment within the contract period, when nominal wages are given. Since employment, in turn, affects the risk that employed workers will lose their jobs, a change in employment will have consequences for future wages and employment levels.
Place, publisher, year, edition, pages
Stockholm: IIES , 1986. , 26 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 347
IdentifiersURN: urn:nbn:se:su:diva-41526OAI: oai:DiVA.org:su-41526DiVA: diva2:331067