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Wage Rigidity and Information: Relativities and Target Rates of Wage Growth

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  • Burgess, Simon M

Abstract

Two popular ideas in models of wage determination are that workers care about wage relativities or have a target rate of wage growth. Th is paper shows how these two institutions can arise as optimizing res sponses in the context of bilateral asymmetric information with sunk costs. Therefore, while they may be inefficient in a first-best sense, they will improve the operation of the labor market in a second-best world. Copyright 1988 by Royal Economic Society.

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  • Burgess, Simon M, 1988. "Wage Rigidity and Information: Relativities and Target Rates of Wage Growth," Oxford Economic Papers, Oxford University Press, vol. 40(3), pages 523-534, September.
    • Handle: RePEc:oup:oxecpp:v:40:y:1988:i:3:p:523-34
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    Cited by:

    1. Lehr, Alex & Vyrastekova, Jana & Akkerman, Agnes & Torenvlied, René, 2016. "Spillovers and conflict in wage bargaining: Experimental evidence," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 59-68.
    2. Alex Lehr & Agnes Akkerman & René Torenvlied, 2015. "Spillover and conflict in collective bargaining: evidence from a survey of Dutch union and firm negotiators," Work, Employment & Society, British Sociological Association, vol. 29(4), pages 641-660, August.
    3. Kuhn, Peter & Gu, Wulong, 1998. "Centralization and strikes," Labour Economics, Elsevier, vol. 5(3), pages 243-265, September.
    4. Alex Lehr & Jana Vyrastekova & Agnes Akkerman & René Torenvlied, 2018. "Horizontal and vertical spillovers in wage bargaining: A theoretical framework and experimental evidence," Rationality and Society, , vol. 30(1), pages 3-53, February.
    5. Kuhn, Peter & Gu, Wulong, 1999. "Learning in Sequential Wage Negotiations: Theory and Evidence," Journal of Labor Economics, University of Chicago Press, vol. 17(1), pages 109-140, January.

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