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Relative Wage Variability: Monetary Policy and the Labor Market

Author

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  • Martin B. Schmidt

    () (Department of Economics, Portland State University)

Abstract

By explicitly examining the symmetry assumption implicit in much of the efficiency wage literature, a plausible supply-side link between monetary policy and worker productivity is introduced. Specifically, if relative wages influence worker behavior asymmetrically and monetary policy alters relative wages, then monetary policy may ultimately affect productivity. The paper reports evidence consistent with both linkages and, therefore, the monetary authority should concern itself not only with demand-side implications, but also with the additional supply-side consideration.

Suggested Citation

  • Martin B. Schmidt, 2000. "Relative Wage Variability: Monetary Policy and the Labor Market," Eastern Economic Journal, Eastern Economic Association, vol. 26(4), pages 439-454, Fall.
  • Handle: RePEc:eej:eeconj:v:26:y:2000:i:4:p:439-454
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume26/V26N4P439_454.pdf
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    Cited by:

    1. Thomas J. Carter, 2005. "Monetary Policy, Efficiency Wages, and Nominal Wage Rigidities," Eastern Economic Journal, Eastern Economic Association, vol. 31(3), pages 349-359, Summer.

    More about this item

    Keywords

    Efficiency Wage; Labor Markets; Monetary Policy; Monetary; Policy; Supply; Wage;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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