earticle

영어

This paper examines how a link between efficiency wages and price indexation can arise in a multisector economy. We show that, the more elastic the worker's effort is with respect to real wages, the looser the optimal linkage of nominal wages to the price level is. This is simply because, as the worker's effort becomes more sensitive to real wages, the output-stabilizing indexing scheme has to make nominal wages less dependent on the price level, thereby delegating firms more flexibility for adjusting the output level. Our result may help explain the recent decline in the share of U.S. union contracts for price indexation.