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Welfare Costs of Sticky Wages When Effort Can Respond

  • Yongsung Chang

    (University of Pennsylvania)

  • Mark Bils

    (University of Rochester)

We examine the impact of wage stickiness when employment has an effort as well as hours dimension. Despite wages being predetermined, the labor market clears through the effort margin. Consequently, welfare costs of wage stickiness are potentially much, much smaller.

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Paper provided by EconWPA in its series Macroeconomics with number 0204003.

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Date of creation: 01 May 2002
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Handle: RePEc:wpa:wuwpma:0204003
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