Credible Threats in a Wage Bargaining Model with on-the-job Search

Cristian Bartolucci

No 203, Carlo Alberto Notebooks from Collegio Carlo Alberto

Abstract: In standard equilibrium search models with strategic wage bargaining and on-the-job search, renegotiation is permitted without requirement of a credible threat. Workers trigger renegotiation whenever they have a new outside option that could raise their wages. In this note I modify the model to be consistent with renegotiation by mutual agreement and I show that estimating the model without imposing credible threats for renegotiation generates downward bias in the estimates of the bargaining power.

Keywords: Credible Threats; On-the-job search; Wage bargaining (search for similar items in EconPapers)
JEL-codes: C7 J3 J64 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2011
New Economics Papers: this item is included in nep-dge and nep-lab
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Journal Article: Credible threats in a wage bargaining model with on-the-job search (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wpaper:203

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