The Persistence and Indeterminacy of Unemployment in Search Equilibrium
Existing theories that explain persistent and indeterminant unemployment are brought together within the unifying framework of search equilibrium. External economies that exhibit increasing return to production and exchange are identified as potential causes for both the indeterminacy and the persistence of unemployment for a wide range of assumptions about wage determination. Those considered include a "market-clearing" wage, an "efficiency" wage, and an "insider-outsider" wage model. Although either of the non-market-clearing specifications can induce greater persistence, multiple equilibria require increasing returns in the technologies of either production or exchange. Copyright 1989 by The editors of the Scandinavian Journal of Economics.
(This abstract was borrowed from another version of this item.)
|Date of creation:||Dec 1988|
|Date of revision:|
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- Peter Howitt, 1988. "Business Cycles With Costly Search and Recruiting," The Quarterly Journal of Economics, Oxford University Press, vol. 103(1), pages 147-165.
- Weitzman, Martin L, 1982. "Increasing Returns and the Foundations of Unemployment Theory," Economic Journal, Royal Economic Society, vol. 92(368), pages 787-804, December.
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in: NBER Macroeconomics Annual 1986, Volume 1, pages 15-90
National Bureau of Economic Research, Inc.
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- Olivier J. Blanchard & Lawrence H. Summers, 1986. "Hysteresis and the European Unemployment Problem," Working papers 427, Massachusetts Institute of Technology (MIT), Department of Economics.
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257, Massachusetts Institute of Technology (MIT), Department of Economics.
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- Christopher A. Pissarides, 1987. "Search, Wage Bargains and Cycles," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 473-483.
- Lindbeck, Assar & Snower, Dennis J, 1986. "Wage Setting, Unemployment, and Insider-Outsider Relations," American Economic Review, American Economic Association, vol. 76(2), pages 235-39, May.
- Blanchard, Olivier Jean & Summers, Lawrence H, 1988. "Beyond the Natural Rate Hypothesis," American Economic Review, American Economic Association, vol. 78(2), pages 182-87, May.
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"Efficiency wages versus insiders and outsiders,"
European Economic Review,
Elsevier, vol. 31(1-2), pages 407-416.
- Howitt, Peter & McAfee, R Preston, 1987. "Costly Search and Recruiting," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 89-107, February.
- Pissarides, Christopher A, 1984. "Search Intensity, Job Advertising, and Efficiency," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 128-43, January.
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