Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting

Pedro Martins, Andy Snell and Jonathan Thomas

No 4346, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Following insights by Bewley (1999a), this paper analyses a model with downward rigidities in which firms cannot pay discriminate based on a year of entry to a firm, and develops an equilibrium model of wages and unemployment. We solve for the dynamics of wages and unemployment under conditions of downward wage rigidity, where forward looking firms take into account these constraints. Using simulated productivity data based on the post-war US economy, we analyse the ability of the model to match certain stylised labour market facts.

Keywords: cross-contract restrictions; labour contracts; business cycle; unemployment; equal treatment; downward rigidity (search for similar items in EconPapers)
JEL-codes: E32 J41 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009-08
New Economics Papers: this item is included in nep-bec, nep-dge, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Scandinavian Journal of Economics, 112(4), 841-863, 2010

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Related works:
Working Paper: Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting (2007)
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