The Macroeconomic Consequences of Reciprocity in Labour Relations

Jean-Pierre Danthine and André Kurmann

No 5174, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We develop and analyse a structural model of efficiency 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 efficiency wage hypothesis. This firm-internal perspective on efficiency 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; Efficiency wages; Wage rigidity (search for similar items in EconPapers)
JEL-codes: E24 E32 J50 (search for similar items in EconPapers)
Date: 2005-08
New Economics Papers: this item is included in nep-bec, nep-lab and nep-mac
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Related works:
Journal Article: The Macroeconomic Consequences of Reciprocity in Labor Relations (2007)
Working Paper: The Macroeconomic Consequences of Reciprocity in Labor Relations (2005)
Working Paper: The Macroeconomic Consequences of Reciprocity in Labor Relations (2005)
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