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Gift Exchange and the Business Cycle: The Fair Wage Strikes Back

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Author Info
Fabrice Collard (CEPREMAP)
David de la Croix (Universite Catholique de Louvain-la-Neuve)

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Abstract

We extend the benchmark real business cycle model amending technology for fair wage considerations. Effort depends on current, alternative and past wages. Past wages are treated as the worker's past wages (personal norm) or as the past wages of the society (social norm). This last model reproduces the high variability of employment, the low variability of wages and the low wage-employment correlation without requiring a second source of impulsions. Wages and employment dynamics are adequately captured when norms adjust slowly to the environment. Fair wages are thus useful to solve the business cycle puzzle when we allow for inter-temporal wage comparisons. (Copyright: Elsevier)

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File URL: http://dx.doi.org/10.1006/redy.1999.0075
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Publisher Info
Article provided by Elsevier for the Society for Economic Dynamics in its journal Review of Economic Dynamics.

Volume (Year): 3 (2000)
Issue (Month): 1 (January)
Pages: 166-193
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Handle: RePEc:red:issued:v:3:y:2000:i:1:p:166-193

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Related research
Keywords: efficiency wage; effort; time-nonseparability; RBC; wage sluggishness; business cycle puzzle;

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Find related papers by JEL classification:
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Julio J. Rotemberg, 2007. "Minimally altruistic wages and unemployment in a matching model," Working Papers 07-5, Federal Reserve Bank of Boston. [Downloadable!]
    Other versions:
  2. Christian Calmès, 2005. "Self-Enforcing Labour Contracts and the Dynamics Puzzle," Working Papers 05-1, Bank of Canada. [Downloadable!]
  3. Charles Nolan & Christoph Thoenissen, 2005. " Labour Markets and Firm-Specific Capital in New Keynesian General Equilibrium Models," CDMA Working Paper Series 0501, Centre for Dynamic Macroeconomic Analysis, revised May 2005. [Downloadable!]
    Other versions:
  4. David, DE LA CROIX & Gregory, DE WALQUE & Rafael, WOUTERS, 2006. "Dynamics and monetary policy in a fair wage model of the business cycle," Discussion Papers (ECON - Département des Sciences Economiques) 2006061, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
    Other versions:
  5. Fabien Tripier, 2005. "Sticky prices, fair wages, and the co-movements of unemployment and labor productivity growth," Macroeconomics 0510015, EconWPA. [Downloadable!]
    Other versions:
  6. Jean-Pierre DANTHINE & John B. DONALDSON, 1999. "Macroeconomic Frictions: What have we Learned from the Real Business Cycle Research Programm ?," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9919, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
  7. Jean-Pierre Danthine & Andre Kurmann, 2004. "Fair Wages in a New Keynesian Model of the Business Cycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(1), pages 107-142, January. [Downloadable!] (restricted)
    Other versions:
  8. Rafael Muñoz, . "Skilled and unskilled employment in a Spanish business cycle model," Studies on the Spanish Economy 20, FEDEA. [Downloadable!]
  9. Jean-Pierre Danthine & André Kurmann, 2005. "The Macroeconomic Consequences of Reciprocity in Labor Relations," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 05.08, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
    Other versions:
  10. Jean-Pierre DANTHINE & André KURMANN, 2007. "The Business Cycle Implications of Reciprocity in Labor Relations," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 07.12, Université de Lausanne, Faculté des HEC, DEEP. [Downloadable!]
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  11. Jean-Pierre DANTHINE & André KURMANN, 2004. "Efficiency Wages Revisited: The Internal Reference Perspective (new version)," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.09, Université de Lausanne, Faculté des HEC, DEEP, revised Jun 2005. [Downloadable!]
  12. Xavier Raurich & Valeri Sorolla, . "Unemployment and Wage Formation in a Growth Model with Public Capital," UFAE and IAE Working Papers 508.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC). [Downloadable!]
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    Other versions:
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