Unemployment, Money Wage Rates, and Inflation
This is a theoretical and empirical study of the interaction of wage changes, unemployment, and inflation. Its main purpose is to obtain a better understanding of the conditions causing inflation ia an economy where both business and labor exact considerable market power, and to establish the nature of the trade-off between inflation and unemployment in the United States, how it has changed in the past, and what can be done to affect this trade-off in the future.
The analysis centers on a model of wage determination in which several variables are identified as important determinants of changes in wage rates. Empirical estimates of the wag change model are made for various time periods, including the postwar years and the 1920's. For the postwar years, estimates are also made of relations explaining the principal variables affecting wage rates, and these are combined with the wage equation in a dynamic analysis of a wage-price-profit subsystem of the economy.
The development and estimation of multivariate model for studying the inflation-unemployment trade-off is in contrast to earlier studies that have examined the effects on wage changes of unemployment alone.
Volume No. 7 in the M.I.T. Economics Monograph Series.