Coordination failures in the labor market

Guillaume Rocheteau and Murat Tasci

Economic Commentary, 2007, issue Nov

Abstract: Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.

Keywords: Labor; market (search for similar items in EconPapers)
Date: 2007
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