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Reduced form wage equations in the credible bargaining model

Author

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  • Vincent Boitier

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Antoine Lepetit

    (Centre de recherche de la Banque de France - Banque de France)

Abstract

We derive an analytical solution for the wage from an alternating-offer wage bar-gaining game à la Hall and Milgrom (2008) under a plausible parameter restriction. This solution is simple, micro-founded and permits a transparent analysis of the driv-ing forces of wages. We argue that it can be used in a wide range of economic models incorporating the search and matching theory of unemployment to simplify the anal-ysis and obtain more easily interpretable results.

Suggested Citation

  • Vincent Boitier & Antoine Lepetit, 2018. "Reduced form wage equations in the credible bargaining model," Post-Print hal-01088831, HAL.
    • Handle: RePEc:hal:journl:hal-01088831
    DOI: 10.1016/j.labeco.2016.04.003
    Note: View the original document on HAL open archive server: https://hal.science/hal-01088831
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    References listed on IDEAS

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    1. Haefke, Christian & Sonntag, Marcus & van Rens, Thijs, 2013. "Wage rigidity and job creation," Journal of Monetary Economics, Elsevier, vol. 60(8), pages 887-899.
    2. Lawrence J. Christiano & Martin S. Eichenbaum & Mathias Trabandt, 2016. "Unemployment and Business Cycles," Econometrica, Econometric Society, vol. 84(4), pages 1523-1569, July.
    3. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
    4. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    5. Robert E. Hall & Paul R. Milgrom, 2008. "The Limited Influence of Unemployment on the Wage Bargain," American Economic Review, American Economic Association, vol. 98(4), pages 1653-1674, September.
    6. Jung, Philip & Kuester, Keith, 2011. "The (un)importance of unemployment fluctuations for the welfare cost of business cycles," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1744-1768, October.
    7. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
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    11. Robert Shimer, 2006. "On-the-Job Search and Strategic Bargaining," Contributions to Economic Analysis, in: Structural Models of Wage and Employment Dynamics, pages 37-59, Emerald Group Publishing Limited.
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    Cited by:

    1. Martin, Christopher & Wang, Bingsong, 2020. "Search, shirking and labor market volatility," Journal of Macroeconomics, Elsevier, vol. 66(C).
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    3. Pierrick Clerc, 2021. "The Dynamics of Unemployment and Inflation in New Keynesian Models with Two Labor Margins," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 53(2-3), pages 301-332, March.

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