Skip to main content
Article thumbnail
Location of Repository

Unemployment equilibria and input prices: theory and evidence from the United States

By Alan A. Carruth, Mark A. Hooker and Andrew J. Oswald


This paper develops an efficiency-wage model where input prices affect the equilibrium rate of unemployment. We show that a simple framework based on only two prices (the real price of oil and the real rate of interest) is able to explain the main post-war movements in the rate of U.S. joblessness. The equations do well in forecasting unemployment many years out-of-sample, and provide evidence that the oil-price spike associated with Iraq’s invasion of Kuwait appears to be a component of the “mystery” recession which followed

Topics: HD
Publisher: University of Warwick, Department of Economics
Year: 1998
OAI identifier:

Suggested articles

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.