Cyclical Wages in a Search-and-Bargaining Model with Large Firms

Julio Rotemberg

No 12415, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents a complete general equilibrium model with flexible wages where the degree to which wages and productivity change when cyclical employment changes is roughly consistent with postwar U.S. data. Firms with market power are assumed to bargain simultaneously with many employees, each of whom finds himself matched with a firm only after a process of search. When employment increases as a result of reductions in market power, the marginal product of labor falls. This fall tempers the bargaining power of workers and thus dampens the increase in their real wages. The procyclical movement of wages is dampened further if the posting of vacancies is subject to increasing returns.

JEL-codes: E24 E37 J64 (search for similar items in EconPapers)
Date: 2006-08
New Economics Papers: this item is included in nep-dge, nep-lab and nep-mac
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

Published as Julio J. Rotemberg, 2006. "Cyclical wages in a search-and-bargaining model with large firms," Proceedings, Federal Reserve Bank of San Francisco.
Published as Cyclical Wages in a Search-and-Bargaining Model with Large Firms , Julio J. Rotemberg. in NBER International Seminar on Macroeconomics 2006 , Reichlin and West. 2008

Downloads: (external link)
http://www.nber.org/papers/w12415.pdf (application/pdf)

Related works:
Chapter: Cyclical Wages in a Search-and-Bargaining Model with Large Firms (2008)
Journal Article: Cyclical wages in a search-and-bargaining model with large firms (2006)
Working Paper: Cyclical Wages in a Search-and-Bargaining Model with Large Firms (2006)
Working Paper: Cyclical wages in a search and bargaining model with large firms (2006)
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:nbr:nberwo:12415

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w12415

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().