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ERIC Number: ED332027
Record Type: RIE
Publication Date: 1990
Pages: 174
Abstractor: N/A
Reference Count: N/A
ISBN: ISBN-0-88099-106-2
Recent Developments in the Theory of Involuntary Unemployment.
Davidson, Carl
The most prominent theories of unemployment that have emerged since 1960 are search, disequilibrium, implicit contracts, efficiency wage, and insider/outsider models. Search models assume that it takes time and effort for employers and potential employees to find each other. A "partial-partial" equilibrium approach focuses on one side of the market. The reservation wage approach focuses on the problem of finding an employer willing to offer adequate compensation. The most promising is the trade friction approach. The fixed price or disequilibrium literature shows that the most effective policy for combating unemployment depends upon which markets are out of equilibrium. Recent work has shown that imperfect competition in a general equilibrium setting may result in "coordination failures." Basic assumptions underlying research in implicit contracts are that contract terms are isolated from market forces and that workers are more averse to risk than employers are. This line of research has encountered difficulties in attempting to explain the coexistence of wage rigidity and unemployment in a contracting framework. The two most promising lines of research in an attempt to explain wage rigidity and unemployment are efficiency wage theory and the insider/outsider theory of unemployment. Two issues remain: empirical verification of critical features of the models and similarities across models. (An index and 176 references are provided.) (YLB)
W. E. Upjohn Institute for Employment Research, 300 South Westnedge Avenue, Kalamazoo, MI 49007 ($22.95 hardcover--ISBN 0-88099-105-4; $13.95 paperback--ISBN 0-88099-106-2).
Publication Type: Books; Information Analyses
Education Level: N/A
Audience: N/A
Language: English
Sponsor: N/A
Authoring Institution: Upjohn (W.E.) Inst. for Employment Research, Kalamazoo, MI.
Identifiers: Equilibrium Model