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Reduced form wage equations in the credible bargaining model

Vincent Boitier and Antoine Lepetit

Labour Economics, 2018, vol. 50, issue C, 92-96

Abstract: We derive an explicit solution for the wage from an alternating-offer wage bargaining game à la Hall and Milgrom (2008) under a plausible parameter restriction. This solution is simple, micro-founded and permits a transparent analysis of the driving forces of wages. When it is used in a stationary steady-state search and matching model, the value of all endogenous variables can be expressed as a function of the parameters of the model and the exogenous variables. In a dynamic setup, the solution is much simpler to implement than the one found in the original paper of Hall and Milgrom (2008).

Keywords: Search and matching model; Credible bargaining; Wage rigidity (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1016/j.labeco.2016.04.003

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