We investigate the impact of workers' exposure to unemployment risk on CEO incentive compensation. Exploiting state …-level changes in unemployment benefits as a source of variation in workers' unemployment costs, we find that after unemployment …

response of unemployment in our incentive pay model calibrated to strongly procyclical wages. …We introduce dynamic incentive contracts into a model of inflation and unemployment dynamics. Our main result is that … wage cyclicality from incentives neither affects the slope of the Phillips curve for prices nor dampens unemployment …

revisional property of the NAIRU is also examined, as well as the forecast capacity of the unemployment gap with regard to wages … perspective, because the vast majority of estimates in the literature use wages to provide an estimate of the unemployment gap …. Therefore, an indicator which does not use wages at all to estimate the unemployment gap performs the best in forecasting wage …

its strength and weakness, discuss its connections with theory, and draw out potential policy implications of its findings …