vs. sticky wages, interactions at the firm level between price and wage-setting, alternative forms of hiring frictions … little real rigidity and, so, too volatile inflation, owing to strong responses of marginal wages and hours per employee … the responses of wages, inflation and employment …

impact on aggregate labor market performance and unemployment. In a two-sector labor market model with free mobility of labor …, an increase in government wages or benefits reduces private sector employment, and government employment is not an …