Wage Norms, Capital Accumulation and Unemployment: A Post Keynesian View
AbstractThe paper presents a Post Keynesian view of unemployment. It argues, firstly, that the effective labour demand need not be downward sloping with respect to real wages and aggregate demand need not be downward sloping with respect to inflation; secondly, that there is a broad case for unemployment hysteresis, understood as endogeneity of the NAIRU, based on social norms in wage bargaining and on the supply-side effects of capital accumulation; and, thirdly that, much as Keynes had argued, capital investment (rather than labour market institutions) is the key variable to explain changes in aggregate unemployment performance across countries and over time. Overall, the paper advocates a Keynesian view of the NAIRU where effective demand determines unemployment in the short run and the deviation of actual unemployment from the NAIRU determines the change in inflation. In the medium term the NAIRU is endogenous and follows actual unemployment.�
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Bibliographic InfoPaper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp253.
Date of creation: 2011
Date of revision:
Other versions of this item:
- Engelbert Stockhammer, 2011. "Wage norms, capital accumulation, and unemployment: a post-Keynesian view," Oxford Review of Economic Policy, Oxford University Press, vol. 27(2), pages 295-311.
- E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
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