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The Macroeconomic Consequences of Reciprocity in Labor Relations

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  • Jean-Pierre Danthine
  • André Kurmann

Abstract

We develop and analyze a structural model of efficiency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing-a feature that is very much present in the data but absent from previous formulations of the efficiency wage hypothesis. This firm-internal perspective on efficiency wages has potentially important macroeconomic consequences: rent-sharing considerations promote wage rigidity, internal amplification and differential responses to technology and demand shocks. Copyright The editors of the "Scandinavian Journal of Economics" 2008 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 109 (2008)
Issue (Month): 4 (03)
Pages: 857-881

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Handle: RePEc:bla:scandj:v:109:y:2008:i:4:p:857-881

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Citations

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Cited by:
  1. Jean-Pierre Danthine & André Kurmann, 2010. "The Business Cycle Implications of Reciprocity in Labor Relations," Working Papers 2010-10, Swiss National Bank.
  2. Ansgar Rannenberg, 2009. "Shocks, Monetary Policy and Institutions: Explaining Unemployment Persistence in "Europe" and the United States," CDMA Working Paper Series 200903, Centre for Dynamic Macroeconomic Analysis.
  3. Addessi, William & Busato, Francesco, 2009. "Fair wages, labor relations and asset returns," Journal of Financial Stability, Elsevier, vol. 5(4), pages 410-430, December.
  4. Strifler, Matthias & Beissinger, Thomas, 2012. "Fairness Considerations in Labor Union Wage Setting: A Theoretical Analysis," IZA Discussion Papers 6799, Institute for the Study of Labor (IZA).
  5. Egger, Hartmut & Egger, Peter & Kreickemeier, Udo, 2013. "Trade, wages, and profits," European Economic Review, Elsevier, vol. 64(C), pages 332-350.
  6. Matthieu Chemin & Joost DeLaat & André Kurmann, 2011. "Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships," Cahiers de recherche 1127, CIRPEE.
  7. Hartmut Egger & Udo Kreickemeier, . "Worker-Specific Effects of Globalisation," Discussion Papers 09/23, University of Nottingham, GEP.
  8. Erkki Koskela & Ronnie Schöb, 2009. "A note on internal and external reference in efficiency wage models," Journal of Economics, Springer, vol. 96(1), pages 79-86, January.
  9. Andrea Vaona, 2013. "Inflation gifts and endogenous growth through learning-by-doing," Working Papers 09/2013, University of Verona, Department of Economics.
  10. Francesco Busato & William Addessi, 2007. "Labor Unions and Asset Prices," Economics Working Papers 2007-05, School of Economics and Management, University of Aarhus.
  11. George Chouliarakis & Monica Correa-Lopez, 2012. "A Fair Wage Model of Unemployment with Inertia in Fairness Perceptions," Working Papers 1203, BBVA Bank, Economic Research Department.
  12. Ansgar, Rannenberg, 2009. "Disinflation and the NAIRU in a New-Keynesian New-Growth Model (Extended Version)," MPRA Paper 13610, University Library of Munich, Germany.

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