Abstract
One of the perennial problems of business cyde theory has been the search for a convincing empirical description and theoretical explanation of the behaviour of wage rates during fluctuations in output and employment. Even the empirical question is hardly settled, although the most recent careful study (Geary and Kennan) confirms the prevailing view that real-wage movements are more or less independent of the business cycle. There are really two subquestions here. The first presumes that nominal wage stickiness is the main route by which nominal disturbances have real macroeconomic effects, and asks why nominal wages should be sticky. The second focuses on real wages, and asks why fluctuations in the demand for labour should so often lead to large changes in employment and small, unsystematic, changes in the real wage.
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© 1992 Springer Science+Business Media Dordrecht
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Mcdonald, I.M., Solow, R.M. (1992). Wage bargaining and employment. In: Garonna, P., Mori, P., Tedeschi, P. (eds) Economic Models of Trade Unions. International Studies in Economic Modelling. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-2378-5_5
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DOI: https://doi.org/10.1007/978-94-011-2378-5_5
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