Truth or Macroeconomic Consequences: Theoretical Implications of the Decline and Rise of Job References in the United States

• Published in: Journal of post Keynesian economics Vol. 22; no. 3; pp. 451 - 475
• Main Author: Cahill, Miles B.
• Format: Journal Article
• Language: English
• Published: White Plains, N.Y Routledge 01.04.2000; M. E. Sharpe; M.E. Sharpe, inc; Taylor & Francis Ltd
• Subjects: Cost efficiency; Economic models; Economic theory; Efficiency wages; Employees; Employers; Employment; Employment references; Enterprises; Impact analysis; Labor costs; Labor demand; Litigation; Macroeconomics; Microeconomics; Recruitment; Studies; U.S.A; Unemployment; Unemployment rates; Wage rates; Wages; Workers; United States > US
• ISSN: 0160-3477; 1557-7821
• DOI: 10.1080/01603477.2000.11490252

The overall purpose of this paper is to examine the impact of the decline and predicted resurgence of references on the natural rate of unemployment and long run wage rate. To accomplish this task, the two roles of references are integrated into each of two separate models of the labor market: a standard efficiency wage model and a standard turnover cost model. These models were chosen because they each have been used in recent years to explain the natural rate of unemployment. Incorporating references into each of the models leads to the prediction that the resurgence of references will cause the long run unemployment rate to fall. However, the impact on wages is less clear.