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Some recent developments in labor economics and their implications for macroeconomics

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  • Lawrence F. Katz

Abstract

This paper reviews three recent directions of research on labor markets and the macroeconomy: models of sectoral shifts and unemployment, efficiency wage theories, and insider-outsider models of wage and employment determination. Sectoral shifts models show how permanent intersectoral shifts in labor demand and the slow process of labor reallocation across sectors may play an important role in explaining aggregate fluctuations. Efficiency wage and insider-outsider models have in common the property that, in equilibrium, firms may pay wages in excess of market clearing. These models provide potential explanations for persistent "involuntary" unemployment and segmented labor markets. Copyright 1988 by Ohio State University Press.
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Suggested Citation

  • Lawrence F. Katz, 1988. "Some recent developments in labor economics and their implications for macroeconomics," Proceedings, Federal Reserve Bank of Cleveland, pages 507-530.
  • Handle: RePEc:fip:fedcpr:y:1988:p:507-530
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    1. Backus, David K & Kehoe, Patrick J & Kydland, Finn E, 1992. "International Real Business Cycles," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 745-775, August.
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    7. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    8. Lawrence F. Katz, 1986. "Efficiency Wage Theories: A Partial Evaluation," NBER Chapters,in: NBER Macroeconomics Annual 1986, Volume 1, pages 235-290 National Bureau of Economic Research, Inc.
    9. Mankiw, N Gregory, 1989. "Real Business Cycles: A New Keynesian Perspective," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 79-90, Summer.
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    Cited by:

    1. Rodrigo Taborda & Juan Carlos Guataqui, 2003. "Firm level evidence of efficiency wages and labor turnover in Colombia's manufacturing industry," BORRADORES DE INVESTIGACIÓN 002729, UNIVERSIDAD DEL ROSARIO.
    2. J.P.G. Reijnders, 2007. "Impulse or propagation? How the tides turned in Business Cycle Theory," Working Papers 07-07, Utrecht School of Economics.
    3. Steven J. Davis & John Haltiwanger, 1992. "Gross Job Creation, Gross Job Destruction, and Employment Reallocation," The Quarterly Journal of Economics, Oxford University Press, vol. 107(3), pages 819-863.
    4. Peter Rodenburg, 2007. "The Remarkable Place of the UV-Curve in Economic Theory," Tinbergen Institute Discussion Papers 07-088/1, Tinbergen Institute.
    5. H. Naci Mocan & Deborah Viola, 1997. "The Determinants of Child Care Workers' Wages and Compensation: Sectoral Differences, Human Capital, Race, Insiders and Outsiders," NBER Working Papers 6328, National Bureau of Economic Research, Inc.
    6. Springer, K.A., 1989. "Wage rigidity and the persistence of unemployment," Serie Research Memoranda 0041, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    7. Michael P. Keane, 1990. "Sectoral shift theories of unemployment: evidence from panel data," Discussion Paper / Institute for Empirical Macroeconomics 28, Federal Reserve Bank of Minneapolis.
    8. Paul Blackley, 2000. "The impact of sectoral shifts in investment on unemployment in U.S. labor markets," Atlantic Economic Journal, Springer;International Atlantic Economic Society, pages 435-449.
    9. Peter Rodenburg, 2007. "The Remarkable Place of the UV-Curve in Economic Theory," Tinbergen Institute Discussion Papers 07-088/1, Tinbergen Institute.
    10. Vera Pirimova, 2011. "The Economic Growth and the Conjuncture Cycle in the Keynesian Models," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 3-20.
    11. Carrington, William J & McCue, Kristin & Pierce, Brooks, 1996. "The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 571-602, October.

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