Journal Article

Coordination failures in the labor market


Abstract: Can two countries, or two different states, with similar technologies, resources, and policies exhibit differences in labor market performance? In contrast to a commonly held view, the answer is yes under some conditions that we review in this Commentary. If these conditions are satisfied, the unemployment rate and the production of an economy can fluctuate even in the absence of shocks. Moreover, government intervention can be useful provided that it coordinates the economy on the preferred outcome.

Keywords: Labor market;

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Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2007

Issue: Nov

Order Number: 1