ABSTRACT
Efficiency wage models can hardly be considered as having given a theoretical embodiment to ideas on the causes of unemployment that were widespread among commentators of the economic scene. The contrary is true for the model that will be examined in this section, the insideroutsider model. The fact that unemployment might be caused by the powerful position of insiders has been a recurrent theme, often associated with the existence of unions. The merit of Lindbeck and Snower is to have translated such an opinion into a theoretical model while at the same time driving a wedge between the insider-outsider phenomenon and the presence of unions.1 Contrary to the authors examined in previous chapters, they do not claim a Keynesian lineage, so that, strictly speaking, their work should not be included within the New Keynesian tradition. Yet, it will seen that important affinities exist between their models and those I have studied in the previous two chapters.
