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Bargaining Solutions and Public Policies in Matching Models

Author

Listed:
  • Sylvain Baumann

    (EDEHN - Equipe d'Economie Le Havre Normandie - ULH - Université Le Havre Normandie - NU - Normandie Université)

  • Samir Amine
  • 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

  • Sylvain Baumann & Samir Amine & Pedro Lages dos Santos, 2018. "Bargaining Solutions and Public Policies in Matching Models," Post-Print hal-02971764, HAL.
    • Handle: RePEc:hal:journl:hal-02971764
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    References listed on IDEAS

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    1. 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.
    2. Kalai, Ehud & Smorodinsky, Meir, 1975. "Other Solutions to Nash's Bargaining Problem," Econometrica, Econometric Society, vol. 43(3), pages 513-518, May.
    3. Diamond, Peter A, 1981. "Mobility Costs, Frictional Unemployment, and Efficiency," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 798-812, August.
    4. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    5. 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.
    6. Anbarci, Nejat & Skaperdas, Stergios & Syropoulos, Constantinos, 2002. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms against Threats Can Have Real Effects," Journal of Economic Theory, Elsevier, vol. 106(1), pages 1-16, September.
    7. 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.
    8. Myerson, Roger B, 1977. "Two-Person Bargaining Problems and Comparable Utility," Econometrica, Econometric Society, vol. 45(7), pages 1631-1637, October.
    9. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    10. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
    11. Chun, Youngsub, 1988. "The equal-loss principle for bargaining problems," Economics Letters, Elsevier, vol. 26(2), pages 103-106.
    12. Samir Amine & Sylvain Baumann & Pedro Lages dos Santos & Fabrice Valognes, 2009. "Revisiting Nash wages negotiations in matching models," Post-Print halshs-00456560, HAL.
    13. Aumann, Robert J. & Maschler, Michael, 1985. "Game theoretic analysis of a bankruptcy problem from the Talmud," Journal of Economic Theory, Elsevier, vol. 36(2), pages 195-213, August.
    14. repec:adr:anecst:y:2004:i:73:p:01 is not listed on IDEAS
    15. Samir Amine & Pedro Lages dos santos & Sylvain Baumann & Fabrice Valognes, 2009. "Revisiting Nash wages negotiations in matching models," Economics Bulletin, AccessEcon, vol. 29(4), pages 3203-3213.
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    Citations

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    Cited by:

    1. 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.
    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, 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.

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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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