Search Frictions, Efficiency Wages and Equilibrium Unemployment

Christopher Martin and Bingsong Wang

No 26/14, Department of Economics Working Papers from University of Bath, Department of Economics

Abstract: This paper analyses equilibrium unemployment in a model that combines efficiency wages with search and matching frictions in the labour market. We express equilibrium unemployment as the sum of a pure efficiency wage component and a component that reflects search frictions. Using standard values of calibrated parameters, we argue that over 85% of equilibrium unemployment is due to effciency wage effects.

Date: 2014-10
New Economics Papers: this item is included in nep-dge
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Journal Article: Search Frictions, Efficiency Wages and Equilibrium Unemployment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:eid:wpaper:45163

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