Wage Bargaining with On-The-Job Search: Theory and Evidence

Pierre Cahuc, Jean-Marc Robin and Fabien Postel-Vinay

No 4154, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The Nash wage bargaining model is ubiquitous in modern labour economics. Yet most applications of this model ignore inter-employer competition for labour services and attribute all of the workers? rent to their bargaining power. In this Paper, we write and estimate an equilibrium model with strategic wage bargaining and on-the-job search and use it to take another look at the determinants of wages in France. There are three essential determinants of wages in our model: productivity, competition between employers resulting from on-the-job search, and the workers? bargaining power. We find that between-firm competition matters a lot in the determination of wages, as it is quantitatively more important than wage bargaining à la Nash in raising wages above the workers? ?reservation wages?, defined as out-of-work income. In particular, we detect no significant bargaining power for intermediate- and low-skilled workers, and a modestly positive bargaining power for high-skilled workers. In addition, the Paper provides some empirical information on the nature of sorting of workers by firms.

Keywords: Search frictions; Structural estimation; Wage bargaining; Labour market competition (search for similar items in EconPapers)
JEL-codes: J31 J41 J64 (search for similar items in EconPapers)
Date: 2003-12
New Economics Papers: this item is included in nep-dge
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://cepr.org/publications/DP4154 (application/pdf)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org

Related works:
Journal Article: Wage Bargaining with On-the-Job Search: Theory and Evidence (2006)
Working Paper: Wage Bargaining with On-the-Job Search: Theory and Evidence (2006)
Working Paper: Wage Bargaining with On-the-Job Search: Theory and Evidence (2006)
Working Paper: Wage bargaining with on-the-job search: theory and evidence (2006)
Working Paper: Wage bargaining with on-the-job search: theory and evidence (2006)
Working Paper: Wage bargaining with on-the-job search: Theory and evidence (2006)
Working Paper: Wage bargaining with on-the-job search: theory and evidence (2006)
Working Paper: Wage bargaining with on-the-job search: theory and evidence (2003)
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: https://EconPapers.repec.org/RePEc:cpr:ceprdp:4154

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP4154
orders@cepr.org

Access Statistics for this paper

More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by (repec@cepr.org).