Equilibrium Unemployment and Wage Formation with Matching Frictions and Worker Moral Hazard

Guillaume Rocheteau ()

Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP

Abstract: This paper synthesizes the shirking and the matching approaches of equilibrium unemployment in order to endogenize the wage formation process as a function of labour market conditions. The steady state equilibrium can take two forms depending on wether the no-shirking condition is binding or not. It is demonstrated that the efficiency wage approach is relevant when the unemployment rate is above a certain threshold. Futhermore, an efficiency wage is more likely when the disutility of effort is high, recruiting costs and workers' bargaining power are low, inspections are unlikely and the workers' productivity is weak.

Keywords: equilibrium unemployment; matching model; moral hazard (search for similar items in EconPapers)
JEL-codes: E24 J41 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge, nep-lab, nep-mic and nep-reg
Date: 2000-03

Published in Labor Economics, vol. 8 (1), Feb. 2001, pp. 75-102

Downloads: (external link)
http://www.hec.unil.ch/deep/textes/00.07b.pdf (application/pdf)

Related works:
Journal Article: Equilibrium unemployment and wage formation with matching frictions and worker moral hazard (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:lau:crdeep:00.07

Access Statistics for this paper

More papers in Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) from Université de Lausanne, Faculté des HEC, DEEP
Address: Université de Lausanne, Faculté des HEC, DEEP, Internef, CH-1015 Lausanne
Series data maintained by Claudine Delapierre Saudan ().