Abstract
This paper attempts to reformulate in a general equilibrium framework Reder's model, which explains cyclical variations in wage differentials and their general tendencies to narrow. Specifically, I focus on the three aspects of his model: the microeconomic behavior of a firm under imperfect information about labor quality, the mechanism of the economy creating unemployment, and the interaction between wage differentials and unemployment. I also explore its implications for the macroeconomic issues on the characteristics of current unemployment and the question of why aggregate employment fluctuates.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
