Shirking, Endogenous Lay-off Rates and the A-cyclicality of the Real Wage

Arbeitspapier

The paper extends the Shapiro-Stiglitz (1987) efficiency wage model by endogenising the probability of worker displacement as a function of the change in the firm's employment. This creates counter-cyclical variation in the wage mark-up and thereby generates real wage persistence. A New Keynesian DSGE model equipped with this extension replicates the empirical facts of a very limited response of the real wage to the business cycle together with a lagged hump-shaped response of employment to output.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WIFO Working Papers ; No. 350

Classification and Topics

• Classification: Wirtschaft
• Subject: Efficiency wages ; shirking ; real wage persistence ; New Keynesian models ; Effizienzlohn ; Reallohn ; Dynamisches Gleichgewicht ; Neoklassische Synthese ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Rünstler, Gerhard
• Event: Veröffentlichung
• (who): Austrian Institute of Economic Research (WIFO)
• (where): Vienna
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/128892
• Last update: 10.03.2025, 11:44 AM CET