Minimally altruistic wages and unemployment in a matching model with monopsony
AbstractA monopsony model with a symmetric equilibrium is developed where posting higher wages reduces employee departures. This monopsony implies that wage changes have small effects on profits so that employer altruism affects wages as well. Even selfish firms act altruistically if workers punish firms that fail to do so. If the marginal utility of income falls sharply with income, the model can explain modest responses of wages to shifts in labor demand. If there are fluctuations in the altruism required by workers, the low correlation of wages and employment and the sizes of the cyclical fluctuations in these two series can be rationalized.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Monetary Economics.
Volume (Year): 55 (2008)
Issue (Month): Supplement 1 (October)
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Web page: http://www.elsevier.com/locate/inca/505566
Matching models Altruism Unemployment Monopsony;
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