Competitive Wage Cycles with Imperfect Output Market Competition
AbstractWe consider a model of a sector in which the same set of oligopolistic firms faces a common labour supply constraint. The wage is given in the short run, adjusting competitively in the longer run. When the costs of job creation are low relative to the degree of output market power, there exists no wage that clears the labour market in the short run, and at some wages there are two equilibria, one with involuntary unemployment and one with unfilled vacancies. The competitive wage dynamics produces a cycle with persistent labour market disequilibrium and recurrent periods of involuntary unemployment.
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Bibliographic InfoPaper provided by Economics, The Univeristy of Manchester in its series Centre for Growth and Business Cycle Research Discussion Paper Series with number 19.
Length: 22 pages
Date of creation: 2002
Date of revision:
involuntary unemployment; imperfect competition; mulitple equilibria;
Other versions of this item:
- L Kaas & P Madden, 2002. "Competitive Wage Cycles with Imperfect Output Market Competition," The School of Economics Discussion Paper Series 0212, Economics, The University of Manchester.
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