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Suggested answer after having thought about it for 5 minutes :-).
c) doesn't happen because the old company is bankrupt. Shifting companies takes time, just as in PSST.
"Why is the old company bankrupt?", you ask. They should have lowered wages which employees would gladly have accepted, to stave off bankruptcy.
"Look at AIG", I say. Wages would have had to be lowered below 0 (or at least below most people's reservation wage) to keep the company afloat without a bailout. Technically, a rigidity at "0" is still a rigidity, and still necessary for the story to work, but this rigidity clearly there, whereas the nominal rigidity most people are talking about is not at "0" but at or near current wage.
Could be completely wrong.
My response is much like Eric's.
House builders and financial intermediaries should have seen negative production after 2007. Employees in those fields were neither needed nor wanted at any price.
If the malinvestment is severe enough, you may not simply fail to have PSST: you may actively have PUST.
Because the wage of the mortgage underwriters is completely insignificant compared to the total cost of purchasing a house. Reduce their wage to 0, pass the whole savings to the consumer and you still won't see any more house purchases.
I saw a news story about companies that use "Open Books Management". In it they said that the employees of companies that use "Open Books Management" opted for lower pay in place of layoffs which is right in line with c.