I propose a new mechanism for sluggish wages based on workers’ noisy information about the state of the economy. Wages do not respond immediately to a positive aggregate shock because workers do not (yet) have enough information to demand higher wages. This increases firms’ incentives to post more vacancies, which makes unemployment volatile and sensitive to aggregate shocks. The model is robus...

terms, too high a level of aggregate wages reflects an imbalance of labour market power between active participants in the labour market (insiders), and those with a less effective presence (outsiders). Such an imbalance can diminish the benefits of productivity-enhancing reforms if the increase in productivity is captured predominantly by those already employed, in the form of higher wages, ra...

Q methods for increasing nominal wages reduce real wages (i.e., buying power) by creating inflation, shortages, lower quality, and long-term unemployment. To increase real wages (i.e., the ability to buy more), economic principles prescribe increasing productivity (i.e., greater output from less input). In contrast, marketing principles prescribes increasing the value of output (i.e., greater c...

At the end of 1997 the average unemployment rate across Europe was just over 10 per cent, more than twice the rate in the United States. Worse, the average (standardised) unemployment rate in Europe has exceeded 10 per cent in every year since 1993. By contrast, the average annual unemployment rate in the United States since the war has never exceeded 10 per cent in any year and the highest ann...

This paper analyzes the evolution of regional unemployment rates, wages, participation rates, migration and employment in seven candidate countries for accession to the European Union (EU) in the 1990s. We compare these countries to a core set of EU member states and find persistent regional disparities in both regions. However, persistence of unemployment rates is lower in the first-round cand...

This paper estimates the impact of UK labour market reforms on UK wages in seven industrial sectors. We estimate real wage equations, disaggregated by industry, and find that the introduction of labour market reforms corresponds with an increase in wage flexibility for some of our sample industries from 1986 onwards. The main findings of this study are as follows: 1. Unemployment only has a sig...