A cointegration model for search equilibrium wage formation
AbstractIn flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective, this paper presents an econometric analysis of the influence of labor market flows on wage formation as an alternative to the traditional specification of wage equations in which unemployment represents Phillips-curve or wage-curve effects. The paper estimates a dynamic wage equation for the Netherlands using a cointegration approach. It finds that labor flows, and notably flows from outside the labor market, are important determinants of both short-run and long-run wage setting.
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Bibliographic InfoArticle provided by Universidad del CEMA in its journal Journal of Applied Economics.
Volume (Year): IX (2006)
Issue (Month): (November)
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wage curve; labor market flows; cointegration model;
Other versions of this item:
- L. Broersma & Frank A.G. den Butter & Udo Kock, 2003. "A Cointegration Model for Search Equilibrium Wage Formation," Tinbergen Institute Discussion Papers 03-088/3, Tinbergen Institute.
- Broersma, Lourens & Butter, Frank A.G. den & Kock, Udo, 2003. "A Cointegration Model for Search Equilibrium Wage Formation," Serie Research Memoranda 0021, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
- International Monetary Fund, 2004. "A Cointegration Model for Search Equilibrium Wage Formation," IMF Working Papers 04/92, International Monetary Fund.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
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