The Impossibility of Involuntary Unemployment in New Keynesian Efficiency Wage Models

Paul Wojick and Mark Pernecky
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Paul Wojick: Saint Olaf College
Mark Pernecky: Saint Olaf College

Eastern Economic Journal, 1994, vol. 20, issue 3, 291-300

Abstract: New Keynesian efficiency wage theories seek to model involuntary unemployment based on Neoclassical (and New Classical) microfoundationg. As a consequence, they remain open to valid criticisms from New Classical economists, who object to the very notion of involuntary unemployment. The use of the Neoclassical production function is especially problematic in depicting involuntary unemployment. Methodological insights into the strategies that have been pursued to model involuntary unemployment clarify the debate between New Keynesians and New Classical. They also point to the superiority of Keynes' method and theoretical strategy for explaining involuntary unemployment.

Keywords: Involuntary Unemployment; Unemployment; Wage (search for similar items in EconPapers)
JEL-codes: E24 (search for similar items in EconPapers)
Date: 1994
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Persistent link: https://EconPapers.repec.org/RePEc:eej:eeconj:v:20:y:1994:i:3:p:291-300

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