Efficiency Wage, Commitment and Hysteresis

Gilles Saint-Paul

Annals of Economics and Statistics, 1995, issue 37-38, 39-53

Abstract: The efficiency wage model is usually thought of as a plausible model of the natural rate of unemployment which has little to say about its dynamics. This paper establishes that if firms pay efficiency wages and have some degree of commitment over their employment policy, then employment dynamics exhibit hysteresis. The implied behaviour of unemployment, however, is more similar to the one genrated by a firing costs model rather than the insider/outsider model. Hence the model does not exhibit as much persistence as the insider/outsider model.

Date: 1995
References: Add references at CitEc
Citations: View citations in EconPapers (23)

Downloads: (external link)
http://www.jstor.org/stable/20075979 (text/html)

Related works:
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:adr:anecst:y:1995:i:37-38:p:39-53

Access Statistics for this article

Annals of Economics and Statistics is currently edited by Laurent Linnemer

More articles in Annals of Economics and Statistics from GENES Contact information at EDIRC.
Bibliographic data for series maintained by Secretariat General () and Laurent Linnemer ().