The Macroeconomic Consequences of Reciprocity in Labor Relations

Jean-Pierre Danthine and André Kurmann

Cahiers de Recherches Economiques du Département d'économie from Université de Lausanne, Faculté des HEC, Département d’économie

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)
Pages: 34 pages
Date: 2005-07
New Economics Papers: this item is included in nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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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 Labour Relations (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:lau:crdeep:05.08

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