Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/128892
Authors: 
Rünstler, Gerhard
Year of Publication: 
2009
Series/Report no.: 
WIFO Working Papers 350
Abstract: 
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.
Subjects: 
Efficiency wages
shirking
real wage persistence
New Keynesian models
Document Type: 
Working Paper

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