Multi-Levels Bargaining and Efficiency in Search Economies

Olivier Lharidon and Franck Malherbet
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Olivier Lharidon: University of Rennes 1 - CREM-CNRS
Authors registered in the RePEc Author Service: Olivier L'Haridon

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: In this note, we extend the traditional search and matching framework to take account of the different levels at which negotiations may take place. We show that, in the absence of any distortion, sector-level bargaining ought to be less efficient than bargaining taking place at the other levels. This type of inefficiency leaves room for labor market policies. We show that a well designed combination of employment protection, hiring subsidy and payroll tax is able to restore efficiency. In addition, this result suggests that the relationship between the labor market performance and the level at which bargaining takes place is conditional on labor market institutions.

Keywords: Search and Matching Models; Bargaining Levels; Labor Market Policies (search for similar items in EconPapers)
JEL-codes: J41 J48 J51 J60 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-dge and nep-lab
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Related works:
Working Paper: Multi-Levels Bargaining and Efficiency in Search Economies (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:tut:cremwp:201124

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