This paper a two-sector Sraffian pricing model with heterogeneous labour in conjunction with a Keynesian quantity system in order to investigate whether changes in relative employments of different types of labour can be systematically linked to changes in their relative costs. The paper employs...

A important part of mainstream economic belief in the ability of price and wage flexibility to eliminate unemployment has been the so-called Keynes effect, viz., downward flexibility in prices and wages reducing interest rates and stimulating effective demand. Yet, the theoretical real wage...