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Complementarity of Labor Market Institutions, Equilibrium Unemployment and the Propagation of Business Cycles Author info | Abstract | Publisher info | Download info | Related research | Statistics Michael C. Burda
Mark Weder
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This paper evaluates complementarities of labor market institutions and the business cycle in the context of a stochastic dynamic general equilibrium model economy. Matching between workers and vacancies with endogenous time spent in search, Nash-bargained wages, payroll taxation, and differential support for unemployed labor in search and leisure are central aspects of the model. For plausible regions of the policy and institutional parameter space, the model exhibits more persistence than standard real business cycle models and can exhibit indeterminacy of rational expectations paths without increasing returns in production. Furthermore, labor market institutions act in a complementary fashion in generating these effects. Copyright Verein fü Socialpolitik and Blackwell Publishers Ltd 2002.
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Article provided by Blackwell Publishing in its journal German Economic Review .
Volume (Year): 3 (2002)
Issue (Month): 1 (02)
Pages: 1-24
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Handle: RePEc:bla:germec:v:3:y:2002:i:1:p:1-24Contact details of provider: Web page: http://www.blackwellpublishing.com/journal.asp?ref=1465-6485
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Paper M. Burda & M. Weder, .
"Complementarity of Labor Market Institutions, Equilibrium Unemployment and the Propagation of Business Cycles ,"
Sonderforschungsbereich 373
2001-49, Humboldt Universitaet Berlin.
Burda, Michael C. & Weder, Mark, 2001.
"Complementarity of Labor Market Institutions, Equilibrium Unemployment and the Propagation of Business Cycles ,"
Discussion Paper Series
26367, Hamburg Institute of International Economics.
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