Search Frictions, Efficiency Wages and Equilibrium Unemployment

Christopher Martin, Bingsong Wang

Research output: Working paper

174 Downloads (Pure)

Abstract

This paper analyses equilibrium unemployment in a model that
combines efficiency wages with search and matching frictions in the
labour market. We express equilibrium unemployment as the sum of a
pure efficiency wage component and a component that reflects search
frictions. Using standard values of calibrated parameters, we argue that
over 85% of equilibrium unemployment is due to effciency wage effects.
Original languageEnglish
Place of PublicationBath, UK
PublisherDepartment of Economics, University of Bath
Publication statusPublished - Oct 2014

Publication series

NameBath Economics Research Working Papers
Volume26/14

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  • Cite this

    Martin, C., & Wang, B. (2014). Search Frictions, Efficiency Wages and Equilibrium Unemployment. (Bath Economics Research Working Papers; Vol. 26/14). Department of Economics, University of Bath.