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The Macroeconomic Consequences of Reciprocity in Labor Relations

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  • Jean-Pierre Danthine
  • André Kurmann

Abstract

We develop and analyse a structural model of efficiency wages founded on reciprocity. Workers are assumed to face an explicit trade-off between the disutility of providing effort and the psychological benefit of reciprocating the gift of a wage offer above some reference level. The model provides a rationale for rent sharing -- a feature that is very much present in the data but absent from previous formulations of the efficiency wage hypothesis. This firm-internal perspective on efficiency wages has important macroeconomic consequences: rent-sharing considerations promote wage rigidity, internal amplification and asymmetric responses to technology and demand shocks.

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Paper provided by UCLA Department of Economics in its series Levine's Bibliography with number 784828000000000299.

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Date of creation: 24 Aug 2005
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Handle: RePEc:cla:levrem:784828000000000299

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Citations

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Cited by:
  1. Andrea Vaona, 2013. "Inflation gifts and endogenous growth through learning-by-doing," Working Papers 09/2013, University of Verona, Department of Economics.
  2. Jean-Pierre Danthine & André Kurmann, 2010. "The Business Cycle Implications of Reciprocity in Labor Relations," Working Papers 2010-10, Swiss National Bank.
  3. Hartmut Egger & Udo Kreickemeier, 2010. "Worker-specific Effects of Globalisation," The World Economy, Wiley Blackwell, vol. 33(8), pages 987-1005, 08.
  4. Monica Correa-Lopez & George Choullarakis, 2012. "A Fair Wage Model of Unemployment with Inertia in Fairness Perceptions," Working Papers 1203, BBVA Bank, Economic Research Department.
  5. Ansgar, Rannenberg, 2009. "Disinflation and the NAIRU in a New-Keynesian New-Growth Model (Extended Version)," MPRA Paper 13610, University Library of Munich, Germany.
  6. Francesco Busato & William Addessi, 2007. "Labor Unions and Asset Prices," Economics Working Papers 2007-05, School of Economics and Management, University of Aarhus.
  7. Strifler, Matthias & Beissinger, Thomas, 2012. "Fairness Considerations in Labor Union Wage Setting: A Theoretical Analysis," IZA Discussion Papers 6799, Institute for the Study of Labor (IZA).
  8. Udo Kreickemeier & Peter Egger & Hartmut Egger, 2012. "Trade, Wages, and Profits," 2012 Meeting Papers 188, Society for Economic Dynamics.
  9. Matthieu Chemin & Joost DeLaat & André Kurmann, 2011. "Reciprocity in Labor Relations: Evidence from a Field Experiment with Long-Term Relationships," Cahiers de recherche 1127, CIRPEE.
  10. Ansgar Rannenberg, 2009. "Shocks, Monetary Policy and Institutions: Explaining Unemployment Persistence in "Europe" and the United States," CDMA Working Paper Series 200903, Centre for Dynamic Macroeconomic Analysis.
  11. Erkki Koskela & Ronnie Schöb, 2009. "A note on internal and external reference in efficiency wage models," Journal of Economics, Springer, vol. 96(1), pages 79-86, January.
  12. Addessi, William & Busato, Francesco, 2009. "Fair wages, labor relations and asset returns," Journal of Financial Stability, Elsevier, vol. 5(4), pages 410-430, December.

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