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Bargaining Solutions and Public Policies in Matching Models

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  • Samir Amine
  • Sylvain Baumann
  • Pedro Lages Dos Santos

Abstract

The aim of this paper is to show that usually the literature under or overestimate the effect of public policies on the labor market by using systematically a symmetric Nash bargaining solution to share the surplus between worker and firm. Indeed, using a matching model framework, we compare and analyze Nash, Egalitarian, Kalai-Smorodinsky and Equal-Sacrifice solutions. We show that the effects of public policies, as minimum wage or unemployment benefits, would be more or less significative depending on the bargaining solution. It appears that Nash and egalitarian solutions are less inclined to study the impacts of the introduction of the minimum wage.

Suggested Citation

  • Samir Amine & Sylvain Baumann & Pedro Lages Dos Santos, 2018. "Bargaining Solutions and Public Policies in Matching Models," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-14.
    • Handle: RePEc:bas:econst:y:2018:i:4:p:3-14
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    References listed on IDEAS

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    1. Myerson, Roger B, 1977. "Two-Person Bargaining Problems and Comparable Utility," Econometrica, Econometric Society, vol. 45(7), pages 1631-1637, October.
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    6. Samir Amine & Sylvain Baumann & Pedro Lages dos Santos & Fabrice Valognes, 2009. "Revisiting Nash wages negotiations in matching models," Post-Print halshs-00456560, HAL.
    7. Guy Laroque & Bernard Salanie, 2004. "Salaire minimum et emploi en présence de négociations salariales," Annals of Economics and Statistics, GENES, issue 73, pages 1-22.
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    13. Gerber, Anke & Upmann, Thorsten, 2006. "Bargaining solutions at work: Qualitative differences in policy implications," Mathematical Social Sciences, Elsevier, vol. 52(2), pages 162-175, September.
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    15. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
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    Cited by:

    1. Claus‐Jochen Haake & Thorsten Upmann & Papatya Duman, 2023. "Wage bargaining and employment revisited: separability and efficiency in collective bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(2), pages 403-440, April.
    2. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2019. "The Decomposability of the Nash Bargaining Solution in Labor Markets," Working Papers CIE 128, Paderborn University, CIE Center for International Economics.
    3. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2020. "Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining," CESifo Working Paper Series 8422, CESifo.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy

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