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Welfare costs of sticky wages when effort can respond

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  • Bils, Mark
  • Chang, Yongsung

Abstract

We examine the impact of wage stickiness when employment has an effort as well as hours dimension. Despite wages being predetermined, the labor market clears through the effort margin. Consequently, welfare costs of wage stickiness are potentially much, much smaller.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 50 (2003)
Issue (Month): 2 (March)
Pages: 311-330

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Handle: RePEc:eee:moneco:v:50:y:2003:i:2:p:311-330

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Web page: http://www.elsevier.com/locate/inca/505566

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References

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Citations

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Cited by:
  1. Yongsung Chang & Mark Bils, 2002. "Cyclical Movements in Hours and Effort under Sticky Wages," Macroeconomics 0204004, EconWPA.
  2. Mark Gertler & Jordi Gali & Richard Clarida, 1999. "The Science of Monetary Policy: A New Keynesian Perspective," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1661-1707, December.
  3. Matthias Paustian, 2004. "Welfare Effects of Monetary Policy Rules in a Model with Nominal Rigidities and Credit Market Frictions," Econometric Society 2004 Far Eastern Meetings 597, Econometric Society.
  4. Richard Holt, 2004. "Sticky prices, labour market rigidities and exchange rate puzzles," Money Macro and Finance (MMF) Research Group Conference 2003 47, Money Macro and Finance Research Group.
  5. Moon, Weh-Sol, 2011. "Business cycle with nominal contracts and search frictions," MPRA Paper 31716, University Library of Munich, Germany.

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