Real rigidities in the labour market, Managerial Economics

Real Rigidities in the Labour Market 

New Keynesian  theories of the labour market help in explaining  the existence of involuntary unemployment. The theories also attempt to explain why changes in aggregate demand lead  to  larger changes in employment and relatively  smaller changes in the real wage in the labour market. One of the reasons postulated for the existence of unemployment in the labour market is that firms voluntarily pay higher real wages, as compared to  the market-clearing wage,  to the workers on their  rolls with  a view  to  increasing their  efficiency and1 or with  a  view  to providing them  the incentives not  to shirk work  in a situation where the effort level  of the workers cannot be perfectly monitored. The  imperfections caused thereby in the labour market lead to unemployment. We will qonsider efficiency wage model postulated in New Keynesian theories of unemployment in greater details.  

Posted Date: 10/26/2012 6:45:09 AM | Location : United States







Related Discussions:- Real rigidities in the labour market, Assignment Help, Ask Question on Real rigidities in the labour market, Get Answer, Expert's Help, Real rigidities in the labour market Discussions

Write discussion on Real rigidities in the labour market
Your posts are moderated
Related Questions
Using Factor Incomes for Calculating National Income     A second method is to sum up all the incomes to individuals in the form of wages, rents, interests and profits t

wHAT IS THE SIGNIFICANCE OF EXPECTATION ELASTICITY ?

Suppose that the price elasticity of demand for cereal is -0.75 and the cross-price elasticity of demand between cereal and the price of milk is -0.9. If the price of milk rises by

what is the uses of production functns?

Classification of oligipoly

Causes There are a number of explanations of the business cycle but changes in the level of investment seem to be the most likely.  In the simplest Keynesian model an increase

Like supermarkets, full-service department stores like Macy's are mainly in decline. What factors may these types of stores have in common behind their declines? How would you veri

Problem 1: Using the policy neutrality proposition, Illustrate and determine the effectiveness of applying counter-cyclical monetary policy to stabilise output around its long

Uses of Indifference Curve Analysis Indifference curve analysis is useful when studying welfare economics as follows: They are used to indicate the amount of income and

Disadvantages of a Free Economy The free market gives rise to certain inefficiencies called market failures i.e. where the market system fails to provide an optimal allocation