Using a dynamic efficiency wage model, where a Phillips curve appears because worker morale depends on the unemployment rate and a change in nominal wages, we analyze the effects of fiscal and monetary expansions and of an employment subsidy on unemployment in two steady states. In one steady...

This paper examines positive and normative implications of efficiency-wage induced unemployment within a model of endogenous growth. Sectorspecific impacts of the wage rate on labor efficiency establish a correlation between the growth rate and the rate of unemployment. The sign of this...

The double-dividend argument (as used in political debates) addresses worries that a green tax may lead to higher unemployment when wages are inflexible. As protection against this possibility, it is proposed to use the proceeds of the green tax to subsidize employment. In the best case, this...