Wage norms, capital accumulation, and unemployment: a post-Keynesian view
The paper presents a post-Keynesian view of unemployment. It argues, first, 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; second, that there is a broad case for unemployment hysteresis, understood as endogeneity of the non-accelerating inflation rate of unemployment (NAIRU), based on social norms in wage bargaining and on the supply-side effects of capital accumulation; and, third, that, much as Keynes 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. Copyright 2011, Oxford University Press.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrew Glyn, 2003.
"Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence,"
Economics Series Working Papers
168, University of Oxford, Department of Economics.
- Dean Baker & Andrew Glyn & David Howell & John Schmitt, 2002. "Labor Market Institutions and Unemployment: A Critical Assessment of the Cross-Country Evidence," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2002-17, Schwartz Center for Economic Policy Analysis (SCEPA), The New School.
- George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
- Arestis, Philip & Mariscal, Iris Biefang-Frisancho, 1998.
"Capital shortages and asymmetries in UK unemployment,"
Structural Change and Economic Dynamics,
Elsevier, vol. 9(2), pages 189-204, June.
- Philip Arestis & Iris Biefang-Frisancho Mariscal, . "Capital Shortages and Asymmetries in UK Unemployment," Working Papers 9607, University of East London, Department of Economics.
- Philip Arestis & Malcolm Sawyer, 2003.
"Aggregate Demand, Conflict, and Capacity in the Inflationary Process,"
Economics Working Paper Archive
wp_391, Levy Economics Institute.
- Philip Arestis & Malcolm Sawyer, 2005. "Aggregate demand, conflict and capacity in the inflationary process," Cambridge Journal of Economics, Oxford University Press, vol. 29(6), pages 959-974, November.
- Peter Skott, 2004.
"Fairness as a source of hysteresis in employment and relative wages,"
UMASS Amherst Economics Working Papers
2004-04, University of Massachusetts Amherst, Department of Economics.
- Skott, Peter, 2005. "Fairness as a source of hysteresis in employment and relative wages," Journal of Economic Behavior & Organization, Elsevier, vol. 57(3), pages 305-331, July.
- Skott, Peter, . "Fairness as a source of hysteresis in employment and relative wages," Economics Working Papers 2003-6, Department of Economics and Business Economics, Aarhus University.
- Eckhard Hein & Engelbert Stockhammer, 2007.
"Macroeconomic policy mix, employment and inflation in a Post-Keynesian alternative to the New Consensus Model,"
Department of Economics Working Papers
wuwp110, Vienna University of Economics and Business, Department of Economics.
- Eckhard Hein & Engelbert Stockhammer, 2010. "Macroeconomic Policy Mix, Employment and Inflation in a Post-Keynesian Alternative to the New Consensus Model," Review of Political Economy, Taylor & Francis Journals, vol. 22(3), pages 317-354.
- Andrea Bassanini & Romain Duval, 2006.
"Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions,"
OECD Social, Employment and Migration Working Papers
35, OECD Publishing.
- Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Economics Department Working Papers 486, OECD Publishing.
- Eckhard Hein & Lena Vogel, 2008. "Distribution and growth reconsidered: empirical results for six OECD countries," Cambridge Journal of Economics, Oxford University Press, vol. 32(3), pages 479-511, May.
- Engelbert Stockhammer & Özlem Onaran & Stefan Ederer, 2009.
"Functional income distribution and aggregate demand in the Euro area,"
Cambridge Journal of Economics,
Oxford University Press, vol. 33(1), pages 139-159, January.
- Engelbert Stockhammer & Özlem Onaran & Stefan Ederer, 2007. "Functional income distribution and aggregate demand in the Euro-area," Department of Economics Working Papers wuwp102, Vienna University of Economics and Business, Department of Economics.
- Stockhammer, Engelbert & Onaran, Ozlem, 2004. "Accumulation, distribution and employment: a structural VAR approach to a Kaleckian macro model," Structural Change and Economic Dynamics, Elsevier, vol. 15(4), pages 421-447, December.
- Philip Arestis & Michelle Baddeley & Malcolm Sawyer, 2007. "The Relationship Between Capital Stock, Unemployment And Wages In Nine Emu Countries," Bulletin of Economic Research, Wiley Blackwell, vol. 59(2), pages 125-148, 04.
- Rowthorn, R E, 1977. "Conflict, Inflation and Money," Cambridge Journal of Economics, Oxford University Press, vol. 1(3), pages 215-39, September.
- Olivier Blanchard, 2005.
"European Unemployment: The Evolution of Facts and Ideas,"
NBER Working Papers
11750, National Bureau of Economic Research, Inc.
- Olivier Blanchard, 2006. "European unemployment: the evolution of facts and ideas," Economic Policy, CEPR;CES;MSH, vol. 21(45), pages 5-59, 01.
- Philip Arestis & Iris Biefang-Frisancho Mariscal, 1997. "Conflict, Effort and Capital Stock in UK Wage Determination," Empirica, Springer, vol. 24(3), pages 179-193, October.
- Basil J. Moore, 1983. "Unpacking the Post Keynesian Black Box: Bank Lending and the Money Supply," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 5(4), pages 537-556, July.
When requesting a correction, please mention this item's handle: RePEc:oup:oxford:v:27:y:2011:i:2:p:295-311. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.