Unemployment fluctuations with staggered Nash bargaining

A number of authors have recently emphasized that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity ov
A number of authors have recently emphasized that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity over the business cycle. We address this issue by modifying the MP framework to allow for staggered multiperiod wage contracting. What emerges is a tractable relation for wage dynamics that is a natural generalization of the period-by-period Nash bargaining outcome in the conventional formulation. An interesting side-product is the emergence of spillover effects of average wages on the bargaining process. We then show that a reasonable calibration of the model can account well for the cyclical behavior of wages and labor market activity observed in the data. The spillover effects turn out to be important in this respect. JEL Classification: E32, E50, J64
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Metadaten
Author:Mark Gertler, Antonella Trigari
URN:urn:nbn:de:hebis:30-38193
Series (Serial Number):CFS working paper series (2007, 09)
Document Type:Working Paper
Language:English
Date of Publication (online):2007/02/23
Year of first Publication:2006
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2007/02/23
Tag:Labor Market ; Nash Bargaining ; Unemployment ; Wage Rigidity
Note:
Version Juli 2006
HeBIS PPN:190227435
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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