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The Impossibility of Involuntary Unemployment in New Keynesian Efficiency Wage Models

Author

Listed:
  • Paul Wojick

    (Saint Olaf College)

  • Mark Pernecky

    (Saint Olaf College)

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.

Suggested Citation

  • Paul Wojick & Mark Pernecky, 1994. "The Impossibility of Involuntary Unemployment in New Keynesian Efficiency Wage Models," Eastern Economic Journal, Eastern Economic Association, vol. 20(3), pages 291-300, Summer.
  • Handle: RePEc:eej:eeconj:v:20:y:1994:i:3:p:291-300
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    More about this item

    Keywords

    Involuntary Unemployment; Unemployment; Wage;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity

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