Empirical observation of employment and real-wage fluctuations over the business cycle in Canada and other developed countries

Question

Quizplus · Accepted Answer

Empirical observation has shown that employment is more volatile than real wages over the business cycle in Canada and other developed countries. This suggests that there is some wage stickiness in the short-run, and that the market-clearing theory of unemployment may not fully apply in practice. However, this does not necessarily refute the theory altogether.

Empirical Observation of Employment and Real-Wage Fluctuations Over the Business