The Business Cycle Implications of Reciprocity in Labor Relations

Jean-Pierre Danthine
Authors registered in the RePEc Author Service: Andre Kurmann

No 2010-10, Working Papers from Swiss National Bank

Abstract: We develop a reciprocity-based model of wage determination and incorporate it into a modern dynamic general equilibrium framework. We estimate the model and find that, among potential determinants of wages, rent-sharing (between workers and firms) and wage entitlement (based on wages earned in the past) are important to fit the dynamic responses of output, wages and inflation to various exogenous shocks. Aggregate employment conditions (measuring workers' outside option), on the other hand, are found to play only a negligible role for wage setting. These results are broadly consistent with micro-studies on reciprocity in labor relations but contrast with traditional efficiency wage models which emphasize aggregate labor market variables as the main determinant of wage setting.

Keywords: Efficiency Wages; Reciprocity; Estimated DSGE Models (search for similar items in EconPapers)
JEL-codes: E24 E31 E32 E52 J50 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Related works:
Journal Article: The business cycle implications of reciprocity in labor relations (2010)
Working Paper: The Business Cycle Implications of Reciprocity in Labour Relations (2007)
Working Paper: The Business Cycle Implications of Reciprocity in Labor Relations (2007)
Working Paper: The Business Cycle Implications of Reciprocity in Labor Relations (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:snb:snbwpa:2010-10

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