There is a literature on the causes of wage rigidity and there is a literature on within firm wage structures. We use a survey of CEOs to show that the two are interlinked in that the proposed explanations for the compression of wages within firms also provide an explanation for wage rigidity.

This paper uses survey data from Iceland on 884 firms to test for the theory of customer markets proposed by Phelps and Winter (1970) and Okun (1981). The results provide support for the customer market theory in that managers agree that customers are valuable to firms – they rank them second...

We adjust current account surpluses and deficits of 57 countries in the period 2005-2009 for differences in the age structure of their populations and find that these differences can account for a significant part of the variation in the data. Among the large countries we find that the...

We develop a model of monopsonistic wage competition with heterogenous worker ability and intra-firm production complementarities. We use this to illustrate the conditions under which: (i) the divergence between wages and productivity is an equilibrium phenomena; and (ii) this divergence is...

This paper is an attempt to account for the empirical results of Krueger and Summers (1988) which suggest significant inter-industry wage differentials. We derive a dynamic efficiency wage model where firms use their wage policy to reduce turnover costs. Industry wages are shown to be a positive...

It has been observed that university professors sometimes become less research active in their mature years. This paper models the decision to become inactive as a utility maximising problem under conditions of uncertainty and derives an age-dependent inactivity condition for the level of...

A medium-term relationship exists between share prices, normalised by labour productivity, and the rate of unemployment in the OECD countries. A similar relationship appears to exist between unemployment and house prices. This helps explain decadal changes in mean unemployment, such as the shift...

This paper provides an explanation for the observed positive relationship between youth unemployment and the cost of firing workers. When the cost of firing workers is high, firms only fire when the present discounted value of future losses is high, in which case they gain little by postponing...

We consider the hypothesis that a common factor, global expected returns, drives unemployment and investment in 21 OECD countries over the period 1960-2002. We investigate this hypothesis using a panel-factor augmented-vector autoregression (FAVAR). We first estimate the common factors of...

This paper derives the effect of state-mandated redundancy payments on a firm's firing decision as a function of the characteristics of its stochastic environment. We both summarize the main determinants of the effectiveness of firing costs using numerical simulations and point out some...