wage stickiness

wage stickiness

the tendency for WAGES to adjust downwards slowly in response to EXCESS SUPPLY in the LABOUR MARKET. To the extent that labour markets are characterized by wage stickiness, a deficiency of AGGREGATE DEMAND will usually lead to INVOLUNTARY UNEMPLOYMENT. See KEYNESIAN ECONOMICS, ADJUSTMENT SPEED.
References in periodicals archive ?
The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?
But this is not the issue that modern wage stickiness is about.
The above functional form bears also the advantage of allowing direct comparison of the model with the Walrasian competitive equilibrium, which can be easily obtained by setting unions' bargaining power and the wage stickiness parameter, [[phi].
This result, together with the low frequency of wage changes, provides evidence of wage stickiness in the Colombian formal labor market.
Both features are related to traditional Keynesian views about price and wage stickiness: the negative response of the markup can be viewed as price stickiness, and elastic labor supply as wage stickiness.
Hall, "Employment Fluctuations with Equilibrium Wage Stickiness," NBER Working Paper No.
Another Possible Source of Wage Stickiness, Journal of Macroeconomics, 1: 79-82.
The short-run effect of nominal shocks on real wages illustrates the relative price/ wage stickiness.
Nevertheless, because of nominal price and wage stickiness, changes in household demand and spending affect the amount firms produce for a given level of prices.
The second qualification is that the presence of wage stickiness means that price-inflation variability is generally not the only inflation term in the social welfare function; wage-inflation variability appears too (Erceg, Henderson, and Levin, 2000).
For instance, implicit wage contracts models a la Azariadis (1975), Baily (1974), and Gordon (1974) (ABG hereafter) have already been shown to be relatively effective in generating wage stickiness (Hart & Holmstrom, 1987).
83) Wage stickiness may result from union or employment contracts, or simply wage-earner unwillingness to accept a reduced nominal wage rate for psychological reasons, even though the workers' real wage (adjusted for the purchasing power of money) would not be reduced.