A Keynesian model for determining the level of employment and wages

ABSTRACT

This paper discusses the determination of wages and employment under a Keynesian perspective, stressing mainly the microeconomic aspects of the effective demand. The adopted approach follows the “Weintraub tradition”. It is argued that the level of employment depends only upon the effective demand assuming that relative prices are rigid. However, the real wage is a function also of the level of employment and the relation between nominal wages and the user cost.

KEYWORDS:
Post-Keynesian analysis; employment; wages