The Macroeconomic Consequences of Reciprocity in Labor Relations

Jean-Pierre Danthine () and Andre Kurmann ()

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

Abstract: We develop and analyze a structural model of effciency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing - a feature that is very much present in the data but absent from previous formulations of the effciency wage hypothesis. This firm-internal perspective on effciency wages has important macroeconomic consequences: rent-sharing considerations promote wage rigidity, internal amplification and asymmetric responses to technology and demand shocks.

Keywords: reciprocity; rent-sharing; effciency wages; wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 E32 J50 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-mac
Date: 2005-07
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Related works:
Working Paper: The Macroeconomic Consequences of Reciprocity in Labour Relations (2005)
Working Paper: The Macroeconomic Consequences of Reciprocity in Labor Relations (2005)
Journal Article: The Macroeconomic Consequences of Reciprocity in Labor Relations (2008)
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