Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market

Robert Hall ()

No 11183, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: 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.

JEL-codes: E24 E32 J64 (search for similar items in EconPapers)
Date: 2005-03
New Economics Papers: this item is included in nep-lab and nep-mac
Note: EFG LS PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (159)

Published as Hall, Robert E. “Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market.” Review of Economics and Statistics 87, 3 (August 2005): 397-407.

Downloads: (external link)
http://www.nber.org/papers/w11183.pdf (application/pdf)

Related works:
Journal Article: Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market (2005)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:11183

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w11183

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().