Wage formation and employment in a cointegrated VAR model
AbstractThis paper uses a general equilibrium, monopolistic competition model of wage bargaining between trade unions and firms to derive two steady state relations which are estimated within a cointegrated VAR framework using quarterly Danish data. The first coin-tegrating relation is the marginal productivity condition for labour, derived from profit max-imization of firms who face a downward sloping demand curve for their product. The sec-ond cointegrating relation is a real wage relation, derived from the bargaining between trade unions and firms over wages, in the right-to-manage manner. The theoretical model is not rejected and the model displays parameter constancy throughout the estimation period and is able to forecast out-of-sample.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Econometrics Journal.
Volume (Year): 4 (2001)
Issue (Month): 2 ()
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- Suedekum, Jens & Blien, Uwe, 2004.
"Wages and Employment Growth : Disaggregated Evidence for West Germany,"
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- Rita Duarte & Carlos Robalo Marques, 2009.
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w200915, Banco de Portugal, Economics and Research Department.
- Rita Duarte & Carlos Marques, 2013. "The dynamic effects of shocks to wages and prices in the United States and the Euro Area," Empirical Economics, Springer, vol. 44(2), pages 613-638, April.
- Duarte, Rita & Marques, Carlos Robalo, 2009. "The dynamic effects of shocks to wages and prices in the United States and the euro area," Working Paper Series 1067, European Central Bank.
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