The Relation between Real Wage Rates and Employment: An Intertemporal General- Equilibrium Analysis
The paper studies the relation between real wage rates and employment in an intertemporal model in which expectations of subsequent real wage rates affect equilibrium capital investments and equilibrium interest rates in previous periods. Whether the wage-employment tradeoff is more favourable or less favourable in this model than in the static model with given capital depends on whether there is relatively more substitution in consumption or in production, or, more precisely, whether the elasticity of substitution in production is less than or greater than the inverse of the elasticity of marginal utility in consumption. Copyright Verein für Socialpolitik and Blackwell Publishing Ltd. 2004.
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Volume (Year): 5 (2004)
Issue (Month): 3 (08)
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References listed on IDEAS
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- Michael Bruno & Jeffrey D. Sachs, 1985. "Economics of Worldwide Stagflation," NBER Books, National Bureau of Economic Research, Inc, number brun85-1.
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