Reciprocity, Matching, and Wage Competition

Maria Micevski ()
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Maria Micevski: Department of Economics, University of Konstanz, Germany

No 2013-25, Working Paper Series of the Department of Economics, University of Konstanz from Department of Economics, University of Konstanz

Abstract: The presented model demonstrates how the coexistence of reciprocal and selfish types influences the formation of employment relationships, their profitability, wage differentials, wage competition, and unemployment in the presence of moral hazard. Wage and profitability differentials result from the differences in workers’ reactions to the managers’ wage offers. Moreover, these behavioral differences affect managers’ preferences for worker types. Thus, managers might make higher offers to attract the preferred worker type in a competitive labor market with excess supply of labor compared to a situation without competition. The resulting competitive matching allocates favored reciprocal workers to reciprocal managers. Consequently, unemployment arises first among unfavored reciprocal and selfish workers, respectively.

Keywords: reciprocity; gift exchange; matching; profitability; wage differentials; wage competition; unemployment (search for similar items in EconPapers)
JEL-codes: D03 D21 E24 J31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2013-11-21
New Economics Papers: this item is included in nep-cta, nep-hrm, nep-lab and nep-mac
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