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In Europe, the post-2008 crisis years were marked by systematic government efforts to retrench and restructure essential workplace and labour market protections. These policy changes were designed ostensibly to bring efficiency, affordability and flexibility to national economies, thereby promoting growth and stimulating recovery. A wide range of reforms were implemented in the main European Union member states between 2008 and 2013. An examination of various socio-economic indicators reveals significant gaps between the justification of these reforms, their goals as well as their impact on the well-being of Europe's population. The findings have important implications for future economic policy actions at this critical juncture in the coronavirus pandemic. [ABSTRACT FROM AUTHOR]

Latin American economies are increasingly applying the neo-Schumpeterian approach to innovation when seeking to address development problems. However, although inequality is particularly critical in the region, the topic of inequality is curiously absent from studies which adopt the neo-Schumpeterian approach. Applying the efficiency wage hypothesis, this article examines the relationship between innovation efforts and wage inequality among Argentinean firms, employing a quantile regressions methodology on firm-level wages with data from the National Survey of Employment and Innovation Dynamics (ENDEI) for 2010-2012. The results are articulated with a sectoral analysis as a conditioning factor of the relationship studied, revealing the intense and enduring techno-productive imbalances characteristic in the region. [ABSTRACT FROM AUTHOR]

Copyright of Journal of Management & Economics Research is the property of Journal of Management & Economics Research and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Ankara University SBF Journal / Ankara Üniversitesi SBF Dergisi is the property of Ankara University SBF Journal and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of Intercathedra is the property of Poznan University of Life Sciences Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We examine the wage and employment impact on Chinese firms of an increase in import competition associated with China's WTO accession in December 2001, with an emphasis on state‐owned enterprises (SOEs). We find that both wage and employment are negatively impacted by an increase in import competition, but firms with high state ownership cut employment less and reduce wages more than their private counterparts, suggesting that they prioritize the protection of employment over that of wages. This finding supports the notion that SOEs may have 'multitask' responsibilities in terms of protecting employment as well as achieving efficiency. We also find that firms with higher capital intensity reduce their wages less but cut employment more in response to intensified import competition. This provides empirical support for the efficiency wage theory. [ABSTRACT FROM AUTHOR]

The authors examine a model of employee grievance activity that encompasses both workplace and labor market determinants and attempts to reconcile inconsistent findings in the literature by taking into account the possible moderating effects of labor power. A multi-level analysis of data from 1996--97 on 1,383 blue-collar workers suggests that labor market factors influenced grievance activity much less directly than workplace characteristics did, and that the nature of these influences was more complex than has previously been hypothesized. Specifically, consistent with power-dependence theory, the authors find that the direct effects of at least one labor market factor, the wage premium, were likely to be contingent on labor power, and that the labor market itself may have moderated the effects of certain workplace factors on employee grievance filing in a manner consistent with efficiency wage theory. [ABSTRACT FROM AUTHOR]

The present model embeds a model of intra-industry trade into a labour market, which is characterised by efficiency wages. It is shown that tariff protection of the import competing, home produced brands, may cause the equilibrium unemployment rate to shoot up and instead of protecting the sector may cause it to contract. This is possible when elasticity of demand is high and firms have less market power and thus, protectionist effect of tariffs may get completely reversed. [ABSTRACT FROM AUTHOR]

One must look beyond the behavioral aspects of the Japanese management system to the economic conditions which support the system to understand fully its contribution to Japan's economic recovery. Permanent employment (Nenko) has created a highly efficient dual wage and labor market system but it excludes two-thirds of the Japanese labor force from its benefits. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The section presents a list of research on industrial and labor relations still in progress, as of July 1987. The list includes the "Critical Survey of Theoretical Literature on the Empirical Implications of Efficiency Wage Theories," by Lawrence Katz, "The Current Crisis in the American Labor Movement," by David Brody, "Australian Labor Relations," by George Strauss, "Individual-Level Responses to the Job-Insecurity Experience," by Dan Jacobson, "Development of Leadership Skills Among Women," by Cristina Banks.

The article refers to a change in compensation management--from a focus on the labor market to the concept of equity in compensation--which improves employee motivation and performance. Compensation administrators should help the organization make choices about the design of jobs and reward structures that provide equity and the groups that are motivated by this type of compensation. Performance reward plans satisfy higher-order needs of professional employees because of the extrinsic rewards and opportunity for intrinsic ones. Studies by Leon Festinger, George C. Homans, J. S. Adams, Martin Patchen, and Karl E. Weick and by Lyman W. Porter and Edward E. Lawler are mentioned. Topics are job hierarchy, pay for performance, credibility of performance appraisals, and pay secrecy.

Abstract: We analyze whether efficiency wages operate in urban labor markets, within the framework proposed by Ross and Zenou, in which shirking at work and leisure are assumed to be substitutes. We use unique data from the American Time Use Survey (ATUS) that allow us to analyze the relationships between leisure, shirking, commuting, employment, and earnings. We confirm that shirking and leisure are substitutes, and present an estimate of this relationship, representing the only empirical test of the relationship between a worker's time endowment and shirking at work. Our findings point to the existence of efficiency wages in labor markets. [ABSTRACT FROM AUTHOR]

In this paper we investigate the quantitative importance of efficiency wages of no-shirking type in explaining business cycle fluctuations in Bulgarian labor markets. This is done by augmenting a relatively standard real business cycle model with unobservable workers effort by employers and efficiency wage contracts, as well as through the inclusion of a detailed government sector. This imperfection in labor markets introduces a strong internal transmission mechanism that allows the model framework to capture the business cycles in Bulgarian data better than earlier models, and setups assuming perfectly-competitive labor markets in particular. [ABSTRACT FROM AUTHOR]

Employing a unique dataset of Chinese non-listed firms, this paper investigates the effects of the presence of 19 governance structures on 20 employees' interest indicators. In general, we find that firms with the governance structures pay workers higher hourly wages, require less monthly working hours, and have a smaller chance of wage arrears. Meanwhile, the shares of total wage and welfare expenditures in total sales revenue are lower in these firms, which results in higher profitability. Moreover, firms with the governance structures invest significantly more into training and provide employees with better fringe benefits. Considering the low labor protection standard and the weak external regulations of China's labor market, we explain the positive findings thusly: corporate governance structures induce managers to adjust wage payments to the 'efficiency wage' level, which is the best balance point for the interests of both shareholders and employees and, therefore, for maintaining the stakeholder relationships. We also find the governance structures that give blockholders superpower are negatively associated with employees interests. These results highlight the importance of giving enough discretion to managers in order to successfully find the common ground for creating mutual values for shareholders and employees. [ABSTRACT FROM AUTHOR]

We analyze different committee designs in a model with the endogenous participation of experts who have private information about their own abilities. Each committee design involves a test of abilities whose accuracy influences experts' decisions to participate. We derive the following findings. First, higher wages continuously lower the quality of experts on the committee. Second, and as a consequence of this, optimal committees involve low wages. Third, an increase in transparency improves the quality of experts on the committee. Fourth, larger committees attract less able experts than smaller ones, unless the committee operates under full transparency. [ABSTRACT FROM AUTHOR]

The motivation for this article began from personal experiences with Ritzer's McDonaldization thesis. This thesis refers to the process by which the principles of the fast-food restaurant have gradually dominated most sectors of American society and the world. Not only has the restaurant business been affected, but virtually every other aspect of society, such as education, work, health care, travel, leisure, dieting, politics, and the family have been also influenced by the McDonaldization thesis. The success of McDonaldization is in its promise of efficiency, calculability, predictability and control, to consumers, workers, and managers. This article examines Ritzer's McDonaldization in Penang. [ABSTRACT FROM AUTHOR]

This paper puts seminal contributions to theory of production functions and maximization of explicit quantitative objective functions by Johann Heinrich von Thünen into a systematic historical perspective. We show that his comprehensive 'Tableau Economiques' do imply two exact parametric production functions. Moreover, the renowned 'geometric mean wage' formula is restated as an exact CES marginal labor productivity wage for σ = 2. We review four alternative modes of normative (natural) wage calculations without an explicit production function, and conclude that von Thünen's natural wage differentiation formulas are bona fide alternatives for deriving the natural wage formula. [ABSTRACT FROM AUTHOR]

Copyright of Brazilian Journal of Applied Economics / Economía Aplicada is the property of FEA-RP, Universidade de Sao Paulo and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article comments on the results of a study conducted by professor Daniel Hamermesh on wage bargaining theories published in the July 1973 issue of "Industrial and Labor Relations Review." It analyzes the outcome of a test of the split the difference bargaining models of F. Zeuthen and J. Nash. It concurs with the possibility that the utility functions of the two parties are not identical and linear with regard to wage increases. It considers the definition of bluffing according to Hamermesh. It criticizes the failure of Hamermesh to utilize an analytical opportunity.

Web application frameworks and ORM tools reduce time and effort needed when developing quality applications; but, since they are numerous and heterogeneous choosing the best suited is not an easy task. The comparative studies of these tools do not consider case studies of the necessary complexity to precisely measure their advantages and disadvantages. In order to contribute to the solution of this problem, we measured the HIBERNATE ORM response times for different queries in a rather complex case study with different database sizes, and compared the results with the ones obtained by using manually coded queries. Our comparison is relevant because even though ORMs are an important maintainability factor, not optimal queries can lead to bottle necks. [ABSTRACT FROM AUTHOR]

The article deals with the issues of civil servants' motivation. Motivation of civil servants is a factor increasing the efficiency of the public service. The problem of finding a mechanism to increase the efficiency of public servants, assessment of their work and remuneration for it are relevant throughout the world. The experience of reforming civil service systems in different countries has shown that the system of employee motivation goes far beyond the increase of wages, clearer differentiation of wages based on qualifications and experience, or the scope of benefits provided. The author believes that social protection and motivation of civil servants should include a set of measures aimed at compensation for restrictions objectively determined by the nature of activities; for social expectations of the employee, which form the basis of his/her professional choices, in order to neutralize the factors impeding the effective performance of a particular person. [ABSTRACT FROM AUTHOR]

Using German establishment data, this study finds that the share of blue-collar workers, an outdated production technology and a high-wage policy increase the probability that employers regard the threat of dismissal as a suitable incentive. A participatory human resource management policy, the incidence of a works council and difficulties in filling vacancies decrease the probability. [ABSTRACT FROM PUBLISHER]

In the dynamic Shapiro-Stiglitz efficiency wage model, money has short-run real effects. This is not due to explicit menu costs, near-rationality, or similar rigidities. It is instead the result of the dynamic nonshirking condition, the wage-taking behavior of firms, and the use of money as the unit of account. The dynamic non-shirking condition shows wages to be a function of employment and its rate of change. This causes an indeterminacy; market forces do not drive the wage up or down at the instant of the shock. If firms are wage-takers, they do not drive the wage up or down either; the wage is instantaneously constant. And if money is the unit of account, it is the nominal wage, not the real, that is held constant. So, with a negative monetary shock, employment first falls then gradually returns to its original level. The real wage also returns to its starting point, yielding long-run neutrality. Alternative model specifications exhibit procyclical, countercyclical, or acyclical real wages. [ABSTRACT FROM AUTHOR]

Already classical economists took interest in the role of wages and wage formation mechanisms, as well as in their influence on other components of the labour market. This article aims to systematise contemporary approaches to wages as one of the labour market components that have been developed within major economic theories. The systemization will serve as a basis for identifying main interactions between wages and other labour market components, such as labour supply and demand and labour market disequilibrium. The article presents major concepts formulated within neo-classical and Keynesian theories, labour market segmentation theories, efficiency wage theory, rent-sharing and rent-extraction theories, theory of job search, and search-and-matching models. One of the conclusions arising from the discussion is that the evolution of contemporary labour markets is a challenge for researchers seeking wage formation models adequately describing the real-life circumstances. [ABSTRACT FROM AUTHOR]

We confront microeconomics theory with macroeconomics data. Unemployment results from two main micro-level decisions of workers and firms. Most of the efficiency wage and bargaining theories predict that over the business cycle, unemployment falls below its natural rate when the worker’s real wage exceeds the reservation wage. However, these theories have weak empirical support. Firm’s decision predicts that when the worker’s real wage exceeds the marginal product of labour (MPL), unemployment increases above its natural rate. Accounting for this microeconomic decision helps explain almost all the fluctuations of US unemployment. [ABSTRACT FROM PUBLISHER]

Copyright of Revista de Historia Económica / Journal of Iberian & Latin American Economic History is the property of Cambridge University Press and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Despite the fact that the Equal Pay Act prohibiting wage discrimination based on gender has been in place for fifty years, women continue to experience a substantial gender wage gap across occupational fields, including within academia, where women earn an average of 81% of their male colleagues' earnings. A number of theories exist to explain the wage gap, with human capital theory, career interruptions, and workplace discrimination emerging as widely accepted explanations; therefore, this paper will examine the strengths and weaknesses of these explanations of the wage gap and offer proposals for further action to acknowledge and seek to eliminate gender bias in academia. [ABSTRACT FROM AUTHOR]

We develop and analyze a labor market model in which heterogeneous firms operate under decreasing returns and compete for labor by posting long-term contracts. Firms achieve faster growth by offering higher lifetime wages, which allows them to fill vacancies with higher probability, consistent with recent empirical findings. The model also captures several other regularities about firm size, job flows, and pay, and generates sluggish aggregate dynamics of labor market variables. In contrast to existing bargaining models with large firms, efficiency obtains and the model allows a tractable characterization over the business cycle. (JEL E24, J64, L11) [ABSTRACT FROM AUTHOR]

Blanchard (2000) writes that research on efficiency wages and other labor market models "has not translated into a much better understanding of the dynamic relation between wages and labor market conditions." The current paper seeks to contribute to that understanding. It builds on the important work of Kimball (1989, 1994) to study the effects of a productivity shock in the dynamic version of the Shapiro-Stiglitz efficiency wage model. The main result is that, contrary to previous findings, shocks lead to employment overshooting and instantaneously constant wages. Wages only gradually move to long-run levels. Thus, the short-run macroeconomic labor supply elasticity is large. Short and long-run changes in job creation, job destruction, and flows into and out of employment and unemployment, roughly align with published empirical results. [ABSTRACT FROM AUTHOR]

in the current turbulent business environment, firms are looking for more competitive, innovative and creative organizational and remuneration systems. This study is focused on highly personalized and adjustable indirect remuneration systems; that is, Flexible Benefit Plans. These systems are characterized by a high degree of flexibility and are designed to improve employees' pay efficiency. These systems allow employees to participate in designing their remuneration packages and, through proper fiscal planning, maximize their net pay without increasing the human resources expenses of firms. This research, based on 328 human resource managers from firms located in Spain, analyzes the effect of the adoption of these systems on firms' ability to attract and retain staff. [ABSTRACT FROM AUTHOR]

We modify the standard nutritional efficiency wage model to allow for the fact that employers can directly provide calories to their workers rather than paying a higher wage to induce employees to spend more on their own caloric consumption. We derive the various theoretical outcomes that are possible depending on the assumptions about the transaction costs of directly providing calories. We argue that in most real-world situations the ability of employers to directly provide calories undermines the traditional efficiency wage theory as a cause of equilibrium unemployment. [ABSTRACT FROM AUTHOR]

This paper develops a model of determination of the unionized wage in the presence of both collective bargaining and an efficiency wage. The efficiency of each worker is positively related to both the wage and the unemployment rate in the economy. The unionized wage is greater than the efficiency wage and the firm finds it profitable to keep the unionized wage as close as possible to the efficiency wage. The union leader who is entrusted with the task of determining the unionized wage charges a bribe from the firm to keep the wage close to this level. The corrupt trade union leader and the management of the firm play a two-stage Nash bargaining game from where the equilibrium unionized wage and the bribe are determined. The analysis leads to some interesting results which are important for anticorruption policy formulation. [ABSTRACT FROM AUTHOR]

Melhorar a exportação de um país é amplamente reconhecido como uma questão estratégica. Para um país em desenvolvimento, os benefícios são múltiplos: expandir os mercados de bens e serviços a uma escala global, contribuindo para a criação de empregos, definir padrões tecnológicos e de gestão para os setores da economia e reduzir as vulnerabilidades externas do país, gerando reservas. Esses benefícios justificam a adoção de políticas públicas para apoiar e fomentar as exportações, mas é essencial para garantir que os recursos investidos nesses programas estão sendo utilizados de forma eficaz, exigindo a concepção e implementação de sistemas de avaliação. Este artigo tem como objetivo apresentar e discutir um modelo de avaliação para o PROEX, Programa Brasileiro de Apoio às Exportações. O modelo proposto inclui a definição e cálculo de um conjunto de indicadores que permitam o acompanhamento da medida em que o programa está atingindo seus objetivos principais. Acreditamos que o modelo de avaliação proposto irá contribuir para melhorar a eficiência, eficácia e governança do Programa. [ABSTRACT FROM AUTHOR]

We incorporate reference-dependent worker behavior into a search-matching model of the labor market, in which firms have all the bargaining power and productivity follows a log-linear AR(1) process. Motivated by Akerlof (1982) and Bewley (1999), we assume that existing workers' output falls stochastically from its normal level when their wage falls below a "reference point," which (following Koszegi and Rabin 2006) is equal to their lagged-expected wage. We formulate the model game-theoretically and show that it has a unique subgame perfect equilibrium that exhibits the following properties: existing workers experience downward wage rigidity, as well as destruction of output following negative shocks due to layoffs or loss of morale; newly hired workers earn relatively flexible wages, but not as much as in the benchmark without reference dependence; market tightness is more volatile than under this benchmark. We relate these findings to the debate over the "Shimer puzzle" (Shimer 2005). [ABSTRACT FROM AUTHOR]

This paper attempts to test whether there is econometric evidence in support of the efficiency wage theory in Singapore's manufacturing sector. Two of the possible ways to account for efficiency wages are to show that higher wages have resulted in reduced shirking by workers, and to show that higher wages have resulted in an increase in worker productivity. We find evidence in support of efficiency wages for three out of 18 industries within the manufacturing sector in Singapore based on both ordinary least square (OLS) and 2SLS regression results, and for another two industries based only on OLS and yet another two industries based only on 2SLS. [ABSTRACT FROM AUTHOR]

This article studies the role of staggered efficiency wages in a small-scale DSGE model. The simple structure of the model allows for closed-form solutions. The set-up differs from the related literature in that I assume wages are sticky and unions are responsible for wage-setting. The model has the potential to explain why wages depend strongly on past wage levels as it is suggested by empirical data. The presence of efficiency wages increases persistence, however, only for certain parameter constellations. In particular, the elasticity of effort with respect to the wage has to be large. In an extension of the model I show that this is more likely to be the case if wages are the outcome of a bargaining process between unions and firms. [ABSTRACT FROM PUBLISHER]

This paper evaluates the efficiency of National Basketball Association (NBA) teams under a two-stage DEA framework. Applying the additive efficiency approach, we decompose overall team efficiency into first-stage wage efficiency and second-stage on-court efficiency and find out the individual endogenous weights for each stage. The empirical results show that NBA teams present a better performance on wage efficiency than for on-court efficiency, as on-court efficiency is influenced by many uncontrollable factors. Moreover, NBA teams, on average, tend to possess a higher weight on the first stage, suggesting that teams' managers can enhance organizational efficiency more efficaciously by prudentially recruiting players. [ABSTRACT FROM AUTHOR]

The aim of this study was to explore the characteristics of executive pay, equity ownership incentives and pay–performance relationship in government-controlled firms. Data were hand-collected from the annual reports of 179 companies listed on Bursa Malaysia. The results show that executive pay is lower in government-linked companies. Positive pay–performance relationship is also not evident for this category of firms, which indicates that their executives were largely guaranteed with certain level of pay irrespective of performance. The level of equity ownership incentives provides the executives in government-controlled firms with very little incentive to produce effort that can improve firm performance. Overall, our findings are consistent with the inefficient pay hypothesis developed in this study. [ABSTRACT FROM PUBLISHER]

The shirking and gift exchange models of efficiency wage theory anchor an analysis of the effect of supervision on pay and effort. The contribution hinges on remedying conceptual and analytical limitations of past research to achieve more discriminating tests of the models. The models are supported with respect to pay and effort: (1) autonomous workers are paid more and are more willing to work harder for their employer; (2) workers whose productivity is difficult to evaluate are paid more but are less willing to work harder; and (3) higher pay elicits greater willingness to work harder. Contrary to the models, there is no evidence that sectoral wage differences are due to differences in supervision. [ABSTRACT FROM PUBLISHER]

The paper develops a three-sector small open economy model with two traded final good sectors and a nontraded good sector producing varieties of intermediate goods. There are three primary factors: capital, skilled labour and unskilled labour. Industrial sector producing a tradedgood uses capital, intermediate goods and skilled labour as inputs. Intermediate goods producing sector also uses capital and skilled labour. The efficiency wage hypothesis is introduced to explain unemployment in each of these two labour markets. It is shown that an increase in either type of labour endowment (capital endowment) raises (lowers) the unemployment rate of either type of labour if the scale elasticity of output is very low. On the other hand, if the industrial sector is more capital intensive than the agricultural sector and if efficiency functions of both types of labour are identical, then an increase in either type of labour endowment (capital endowment) lowers(raises) the skilled–unskilled wage ratio. However, the effect of a change in capital endowment on the Gini Coefficient of wage income distribution is ambiguous in sign. [ABSTRACT FROM PUBLISHER]

Critics of an Unconditional Income Grant often argue that its introduction would be detrimental to jobs because it reduces the incentive to provide effort. In this paper, I analyze the effects of possible reactions in reference to an efficiency wage model allowing for heterogeneous jobs. It is found that under certain conditions the introduction of an Unconditional Income Grant may contribute to the drifting apart of wages across sectors. Alternatively, sectors characterized by "easy monitoring" will be driven out of the market. Policy implications based on these findings are discussed. [ABSTRACT FROM AUTHOR]

Highlights: [•] We study the role played by equity and efficiency for altruistic behavior. [•] We implement an artefactual field experiment within a telephone survey. [•] Equity plays a more important role than efficiency for the decision to give. [•] Younger individuals are less concerned with inequality. [•] More educated individuals are more concerned with efficiency. [ABSTRACT FROM AUTHOR]

Regional labor markets are characterized by huge disparities between unemployment rates. Models of the New Economic Geography explain how disparities between regional goods markets endogenously arise but usually assume full employment. This paper discusses regional unemployment disparities by introducing a wage curve based on efficiency wages into the New Economic Geography. The model shows how disparities between regional goods and labor markets endogenously arise through the interplay of increasing returns to scale, transport costs, congestion costs, and migration. The level and stability of regional labor market disparities depends on the extend of labor market frictions. [ABSTRACT FROM AUTHOR]

This paper explores the connection between inflation and unemployment in two different models with fair wages in both the short and the long runs. Under customary assumptions regarding the sign of the parameters of the effort function, more inflation lowers the unemployment rate, albeit to a declining extent. This is because firms respond to inflation-which spurs effort by decreasing the reference wage-by increasing employment, thus maintaining the effort level constant as implied by the Solow condition. A stronger short-run effect of inflation on unemployment is produced under varying as opposed to fixed capital, given that in the former case the boom produced by a monetary expansion is reinforced by an increase in investment. Therefore, I provide a new theoretical foundation for recent empirical contributions that find negative long- and short-run effects of inflation on unemployment. [ABSTRACT FROM AUTHOR]