A theory of wages and labor demand with intra-firm bargaining and matching frictions

Pierre Cahuc, François Marque and Etienne Wasmer
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François Marque: ID2 - Institut Droit et Economie des Dynamiques en Europe - UPVM - Université Paul Verlaine - Metz

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Abstract: This article provides a model of labor market equilibrium with search andwithin-firm strategic bargaining.We yield explicit closed form solutions with heterogeneouslabor inputs and capital. The solution exhibits overemployment.Weshow that higher relative bargaining power for some groups of workers may leadto overemployment relative to other groups, with such other groups being underemployedinstead if they have a lower relative bargaining power. Similarly, thehold-up problem between capitalists and employees does not necessarily lead tounderinvestment in physical capital.

Date: 2008-08
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Citations: View citations in EconPapers (92)

Published in International Economic Review, 2008, 49 (3), pp.943 - 972. ⟨10.1111/j.1468-2354.2008.00502.x⟩

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Related works:
Journal Article: A THEORY OF WAGES AND LABOR DEMAND WITH INTRA-FIRM BARGAINING AND MATCHING FRICTIONS (2008)
Working Paper: A theory of wages and labor demand with intra-firm bargaining and matching frictions (2008)
Working Paper: A Theory of Wages and Labour Demand with Intra-firm Bargaining and Matching Frictions (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03415795

DOI: 10.1111/j.1468-2354.2008.00502.x

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