OVERTIME LABOR, EMPLOYMENT FRICTIONS, AND THE NEW KEYNESIAN PHILLIPS CURVE

• 成果类型: Article
• 署名作者: Madeira, Joao
• 署名单位: University of York - UK
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00457
• 发表日期: 2014-10
• 页码: 767-778
• 关键词: inflation dynamics; cyclical behavior; business-cycle; equilibrium unemployment; indivisible labor; rigidities; VACANCIES; demand; shocks

摘要

This paper presents a New Keynesian (NK) model that is extended to differentiate between straight time and overtime work. The model proposes that the New Keynesian Phillips curve (NKPC) should be estimated with marginal cost measured in terms of overtime labor; the resulting coefficient estimates are in accordance with theory and statistically significant for the hybrid NKPC (which allows for backward-looking price setters) but not for the purely forward-looking NKPC. In the hybrid model, backward-looking behavior is found to be predominant. The paper also shows that the incorporation of employment frictions (predetermined employment and convex adjustment costs) in NK models helps reconcile the frequent price changes found in the microdata with the degree of sluggishness in inflation adjustment to output changes at the macro level.