Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/148413
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2016
Abstract: 
In this paper we investigate the quantitative importance of efficiency wages in explaining fluctuations in Bulgarian labor markets. This is done by augmenting an otherwise standard real business cycle model a la Long and Plosser (1983) with unobservable workers effort by employers and wage contracts as in Shapiro and Stiglitz (1984). This imperfection in labor markets introduces a strong propagation mechanism that allows the model to capture the business cycles in Bulgaria better than earlier models. The model performs well vis-a-vis data, especially along the labor market dimension, and in addition dominates the market-clearing labor market framework featured in the standard RBC model, e.g Vasilev (2009).
Subjects: 
general equilibrium
shirking
efficiciency wages
unemployment
JEL: 
E24
E32
Document Type: 
Preprint

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