Equilibrium unemployment and wage formation with matching frictions and worker moral hazard
AbstractThis paper synthesizes the shirking and the matching approaches of equilibrium unemployment in order to endogenize the wage formation process as a function of labour market conditions. The steady state equilibrium can take two forms depending on wether the no-shirking condition is binding or not. It is demonstrated that the efficiency wage approach is relevant when the unemployment rate is above a certain threshold. Futhermore, an efficiency wage is more likely when the disutility of effort is high, recruiting costs and workers' bargaining power are low, inspections are unlikely and the workers' productivity is weak.
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Bibliographic InfoArticle provided by Elsevier in its journal Labour Economics.
Volume (Year): 8 (2001)
Issue (Month): 1 (January)
Contact details of provider:
Web page: http://www.elsevier.com/locate/labeco
Other versions of this item:
- Guillaume ROCHETEAU, 2000. "Equilibrium Unemployment and Wage Formation with Matching Frictions and Worker Moral Hazard," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 00.07, Université de Lausanne, Faculté des HEC, DEEP.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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