Efficient Bargains and the McDonald-Solow Conjecture
AbstractThis article explores the conjecture of I. McDonald and R. Solow (1981) that the outcome from a bargain over wages and employment can be approximately achieved by a bargain over wages and the labor-capital ratio (the "crew size"), where the latter can be argued to be more representative of the real world. The author derives a crew size contract curve and shows that this conjecture is not generally true. A test to determine which model is generating real-world data is suggested. The wage rigidity results derived by McDonald and Solow for their contract cure do not apply to this crew size contract curve. Copyright 1990 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 8 (1990)
Issue (Month): 4 (October)
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Other versions of this item:
- Clark, A., 1989. "Efficient Bargains And The Mcdonald-Solow Conjecture," Papers 350, London School of Economics - Centre for Labour Economics.
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