Koenig, Felix; Manning, Alan; Petrongolo, Barbara - Centre for Economic Performance, LSE - 2014
Wages are only mildly cyclical, implying that shocks to labour demand have a larger short-run impact on unemployment … rather than wages, at odds with the quantitative predictions of the canonical search and matching model. This paper provides … cyclicality of wages if the replacement ratio is implausibly high. We show that this failure remains even if wages are only …