Arbeitspapier
Bonus Question: Does Flexible Incentive Pay Dampen Unemployment Dynamics?
We introduce dynamic incentive contracts into a model of unemployment dynamics and present three results. First, wage cyclicality from incentives does not dampen unemployment dynamics: the response of unemployment to shocks is first-order equivalent in an economy with flexible incentive pay and without bargaining, vis-a-vis an economy with rigid wages. Second, wage cyclicality from bargaining dampens unemployment dynamics through the standard mechanism. Third, our calibrated model suggests 46% of wage cyclicality in the data arises from incentives. A standard model without incentives calibrated to weakly procyclical wages, matches unemployment dynamics in our incentive pay model calibrated to strongly procyclical wages.
- Sprache
-
Englisch
- Erschienen in
-
Series: IZA Discussion Papers ; No. 16481
- Klassifikation
-
Wirtschaft
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Business Fluctuations; Cycles
Labor Contracts
- Thema
-
incentive contracts
unemployment dynamics
wage rigidity
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Gaur, Meghana
Grigsby, John
Hazell, Jonathon
Ndiaye, Abdoulaye
- Ereignis
-
Veröffentlichung
- (wer)
-
Institute of Labor Economics (IZA)
- (wo)
-
Bonn
- (wann)
-
2023
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Gaur, Meghana
- Grigsby, John
- Hazell, Jonathon
- Ndiaye, Abdoulaye
- Institute of Labor Economics (IZA)
Entstanden
- 2023
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