TY  - JOUR
AU  - Hall,Robert E.
TI  - Employment Efficiency and Sticky Wages: Evidence from Flows in the Labor Market
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 11183
PY  - 2005
Y2  - March 2005
UR  - http://www.nber.org/papers/w11183
L1  - http://www.nber.org/papers/w11183.pdf
N1  - Author contact info:
Robert E. Hall
Hoover Institution
Stanford University
Stanford, CA  94305-6010
Tel: 650/723-2215
E-Mail: rehall@gmail.com
AB  - I consider three views of the labor market. In the first, wages are flexible and employment follows the principle of bilateral efficiency. Workers never lose their jobs because of sticky wages. In the second view, wages are sticky and inefficient layoffs do occur. In the third, wages are also sticky, but employment governance is efficient. I show that the behavior of flows in the labor market strongly favors the third view. In the modern U.S. economy, recessions do not begin with a burst of layoffs. Unemployment rises because jobs are hard to find, not because an unusual number of people are thrown into unemployment.
ER  -