EMPLOYMENT ADJUSTMENTS IN RECESSION: A WIRE INDUSTRY STUDY

This article draws from “institutional” labour economics and mainstream industrial relations, but differs from the more usual uses of their ideas in a number of ways. For example, the observation we make, that wages and prices are “sticky” downwards and that labour markets respond to falls in demand by employment and quantity adjustments, is not new. Similarly, the idea that labour markets are different from “normal” commodity markets is not of recent origin Hence, while Clay and Hicks were making such observations and speculating on the labour relations consequences of them, Keynes was using the concept of wage rigidity (stickiness) as a central building block in his General Theory which dealt with the conditions for macro‐economic equilibrium.