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Wages and Employment: A Framework for Analysis with Application to Three Policy Issues

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  • CHRISTOPHER A. PISSARIDES

Abstract

This paper surveys recent developments in the theory of employment and wages and describes a framework for policy analysis which recognizes the existence of monopolistic elements in labour markets. Wages are determined by firm‐union bargains, firms choose the number of jobs, and workers influence the fraction of jobs that is filled through search. The framework is applied to the analysis of the wage and employment effects of indexation, tax‐based incomes policies and profit‐sharing.

Suggested Citation

  • Christopher A. Pissarides, 1987. "Wages and Employment: A Framework for Analysis with Application to Three Policy Issues," The Economic Record, The Economic Society of Australia, vol. 63(4), pages 301-312, December.
    • Handle: RePEc:bla:ecorec:v:63:y:1987:i:4:p:301-312
    DOI: 10.1111/j.1475-4932.1987.tb00664.x
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    References listed on IDEAS

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    1. Masanori Hashimoto & Ben T. Yu, 1980. "Specific Capital, Employmemt Contracts, and Wage Rigidity," Bell Journal of Economics, The RAND Corporation, vol. 11(2), pages 536-549, Autumn.
    2. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    3. Yellen, Janet L, 1984. "Efficiency Wage Models of Unemployment," American Economic Review, American Economic Association, vol. 74(2), pages 200-205, May.
    4. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    5. Pissarides, Christopher A, 1985. "Short-run Equilibrium Dynamics of Unemployment Vacancies, and Real Wages," American Economic Review, American Economic Association, vol. 75(4), pages 676-690, September.
    6. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
    7. Shaked, Avner & Sutton, John, 1984. "Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 52(6), pages 1351-1364, November.
    8. Wadhwani, Sushil B, 1987. "The Macroeconomic Implications of Profit Sharing: Some Empirical Evidence," Economic Journal, Royal Economic Society, vol. 97(388a), pages 171-183, Supplemen.
    9. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(1), pages 37-50.
    10. Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1.
    11. Lucas, Robert Jr. & Prescott, Edward C., 1974. "Equilibrium search and unemployment," Journal of Economic Theory, Elsevier, vol. 7(2), pages 188-209, February.
    12. Lucas, Robert E, Jr & Rapping, Leonard A, 1969. "Real Wages, Employment, and Inflation," Journal of Political Economy, University of Chicago Press, vol. 77(5), pages 721-754, Sept./Oct.
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    Cited by:

    1. K.F. Wallis, 1992. "On Macroeconomic Policy and Macroeconomic Modeling," Economics Discussion / Working Papers 92-04, The University of Western Australia, Department of Economics.
    2. Rahma Daly & Marc-Arthur Diaye & Jean-Max Koskievic, 2014. "Workers’ Risk Attitude and Financial Participation," Documents de recherche 14-03, Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne.
    3. Kenneth F. Wallis, 1993. "On Macroeconomic Policy and Macroeconometric Models," The Economic Record, The Economic Society of Australia, vol. 69(2), pages 113-130, June.

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