In the most widely analyzed type of efficiency wage model of involuntary unemployment, firms pay wages in excess of … equilibrium unemployment act as a worker discipline device. This paper concerns what is usually considered the most important … involuntary unemployment. Explicit upfront bonds are only quite rarely observed. A more subtle form of the bonding critique argues …

We analyze involuntary unemployment based on consumers’ utility maximization and firms’ profit maximization behavior … of involuntary unemployment in that model with ongoing mominal wage rate decline (or deflation). Even if the nominal wage … rate declines, we have a steady state with involuntary unemployment and constant output and employment. We need budget …

We show the existence of involuntary unemployment based on consumers’ utility maximization and firms’ profit … seigniorage) to achieve full-employment under a situation with involuntary unemployment. Under constant prices we show the …-employment from a state with involuntary unemployment, we need budget deficit (Proposition 1). 2) If the full-employment state has …

mobility, while unemployment increases in the country with labor market rigidities, reducing welfare. We also find that taste …