backloaded in good times and frontloaded in bad times. We prove that there exists a unique spot target wage, which serves as an … attraction point for smooth wage adjustments. The structural model is estimated on matched employer-employee data from Sweden …

We introduce dynamic incentive contracts into a model of unemployment dynamics and present three results. First, wage …-order equivalent in an economy with flexible incentive pay and without bargaining, vis-a-vis an economy with rigid wages. Second, wage …% of wage cyclicality in the data arises from incentives. A standard model without incentives calibrated to weakly …

decreasing fast near the steady state, firms' efficiency wage contracts generate significant endogenous procyclical variations of …

nominal shocks? One possible propagation mechanism may arise from the fact that nominal price and wage decisions are not …. Models with staggered price or wage setting captures neatly the basic implications of non-synchronised decision making …