Theoretical Foundations of Asymmetries in the Wage-Employment Relationship
Philippe De Villé and
Bruno Van der Linden ()
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Philippe De Villé: UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)
Authors registered in the RePEc Author Service: Philippe R. DeVille
No 1993013, Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)
In recent discussions on wage policies and their effects on employment it has been argued that the elasticity of employment to real wages can be different in case of wage increases and wage decreases. The paper analyses first the conceptual and methodological issues raised by this assertion. It then explores in a comparative static framework some of the possible theoretical foundations that might justify the existence of an asymmetric employment to real wages relationship in the presence of infinitesimal shocks. A non-Walrasian quantity-rationing model and two bargaining models are discussed. In all cases an asymmetric adjustment of employment emerges under assumptions.
Keywords: macroeconomic theory; asymmetries (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1993013
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