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 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

Download full text files

Export metadata

Additional Services

Share in Twitter Search Google Scholar
Metadaten
Author:Mark Gertler, Antonella Trigari
URN:urn:nbn:de:hebis:30-38193
Parent Title (German):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 2007,09
Series (Serial Number):CFS working paper series (2007, 09)
Document Type:Working Paper
Language:English
Year of Completion:2006
Year of first Publication:2006
Publishing Institution:Universit├Ątsbibliothek Johann Christian Senckenberg
Release Date:2007/02/23
Tag:Labor Market; Nash Bargaining; Unemployment; Wage Rigidity
GND Keyword:Arbeitsmarkt; Arbeitslosigkeit; Tarifverhandlung; Lohnstarrheit
Issue:Version July 2006
Page Number:51
HeBIS-PPN:190227435
Institutes:Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS)
Dewey Decimal Classification:3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft
Licence (German):License LogoDeutsches Urheberrecht