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Commuting, Wages and Bargaining Power

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  • Peter RUPPERT
  • Elena STANCANELLI
  • Etienne WASMER

Abstract

We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated every period. The workers' bargaining power in the hours negotiation affects both unemployment volatility and inflation persistence. The closer to zero this parameter, (i) the more firms adjust on the intensive margin, reducing employment volatility, (ii) the lower the effective workers' bargaining power for wages and (iii) the more important the hourly wage in the marginal cost determination. This set-up produces realistic labor market statistics together with inflation persistence. Distinguishing the probability to bargain the wage of the existing and the new jobs, we show that the intensive margin helps reduce the new entrants wage rigidity required to match observed unemployment volatility.

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Bibliographic Info

Article provided by ENSAE in its journal Annals of Economics and Statistics.

Volume (Year): (2009)
Issue (Month): 95-96 ()
Pages: 201-220

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Handle: RePEc:adr:anecst:y:2009:i:95-96:p:11

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  1. Damien Gaumont & Martin Schindler & Randall Wright, 2005. "Alternative Theories of Wage Dispersion," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 05-017, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
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  8. Berg, G.J. van den & Gorter, C., 1996. "Job search and commuting time," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0001, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  9. Shihe Fu & Stephen L. Ross, 2010. "Wage Premia in Employment Clusters: Agglomeration or Worker Heterogeneity?," Working Papers, Center for Economic Studies, U.S. Census Bureau 10-04, Center for Economic Studies, U.S. Census Bureau.
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  15. Ommeren, Jos van & Berg, Gerard J. van den & Gorter, Cees, 1998. "Estimating the marginal willingness to pay for commuting," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0046, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  16. David Roodman, 2009. "Estimating Fully Observed Recursive Mixed-Process Models with cmp," Working Papers, Center for Global Development 168, Center for Global Development.
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Citations

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Cited by:
  1. Rupert, Peter & Wasmer, Etienne, 2012. "Housing and the labor market: Time to move and aggregate unemployment," Journal of Monetary Economics, Elsevier, Elsevier, vol. 59(1), pages 24-36.
  2. García-Morán, Eva & Kuehn, Zoe, 2013. "With strings attached: Grandparent-provided child care and female labor market outcomes," MPRA Paper 48953, University Library of Munich, Germany.
  3. García-Morán, Eva & Kuehn, Zoe, 2012. "With strings attached: Grandparent-provided child care, fertility, and female labor market outcomes," MPRA Paper 37001, University Library of Munich, Germany.
  4. Eva Garcia-Moran & Zoe Kuehn, 2012. "With Strings Attached: Grandparent-Provided Child care, Fertility, and Female Labor Market Outcomes," CEPRA working paper, USI Università della Svizzera italiana 1202, USI Università della Svizzera italiana.

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