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The Natural Rate in a Share Economy

Koford, Kenneth J. and Miller, Jeffrey B. (1987) The Natural Rate in a Share Economy. Social Science Working Paper, 631. California Institute of Technology , Pasadena, CA. (Unpublished)

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Will the natural rate 0f unemployment be lower in the share economy described by Martin Weitzman than in a wage economy? We examine this question for a search economy with an equilibrium unemployment rate, a version 0f Salop's (1979) quits model. Equilibrium unemployment is the same in both economies. We also examine firms' short-run adjustment to shocks. Share-economy firms adjust output less than wage-economy firms for both demand shocks and labor-supply shocks. Depending on whether rapid output adjustment is stabilizing, a share economy may be more or less stable than a wage economy.

Item Type:Report or Paper (Discussion Paper)
Additional Information:We would like to thank Pamela Brown, David Colander, Mark Kuperberg and James Mulligan for helpful comments. An earlier version was presented at the Eastern Economic Association annual meetings, Philadelphia, April 1986.
Group:Social Science Working Papers
Series Name:Social Science Working Paper
Issue or Number:631
Record Number:CaltechAUTHORS:20170911-153623191
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81326
Deposited By: Jacquelyn Bussone
Deposited On:11 Sep 2017 22:55
Last Modified:03 Oct 2019 18:41

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