At 04:41 PM 10/18/01 -0500, you wrote: >sorry, Jim, I meant the Ld curve. if the Ld curve shifts, why do we end >up with any unemployment, presuming the labor market settles into the >new equilibrium?
the Bowles/Gintis argument is that employers deliberately pay a wage about the market-clearing wage in order to motivate workers. I don't believe this, since not all industries pay "efficiency" wages: those rendered unemployed in one industry simply more to another one. In order to get unemployment in this model, other "imperfections" need to be introduced. But if they are, the Walras-Arrow-Debreu model falls apart, since it can't handle having more than one different kind of "imperfection." So even though the "efficiency" wage theory makes some sense, the W-A-D framework that it's used in should be flushed down the commode. Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
