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The Macroeconomic Consequences of Reciprocity in Labour Relations

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  • Danthine, Jean-Pierre
  • Kurmann, Andre

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 C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5174.

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Date of creation: Aug 2005
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Handle: RePEc:cpr:ceprdp:5174

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Keywords: efficiency wages; reciprocity; rent-sharing; wage rigidity;

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Citations

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Cited by:
  1. Francesco Busato & William Addessi, 2007. "Labor Unions and Asset Prices," Economics Working Papers 2007-05, School of Economics and Management, University of Aarhus.
  2. Egger, Hartmut & Egger, Peter & Kreickemeier, Udo, 2011. "Trade, wages, and profits," University of Tuebingen Working Papers in Economics and Finance 23, University of Tuebingen, Faculty of Economics and Social Sciences.
  3. Danthine, Jean-Pierre & Kurmann, André, 2010. "The business cycle implications of reciprocity in labor relations," Journal of Monetary Economics, Elsevier, vol. 57(7), pages 837-850, October.
  4. Strifler, Matthias & Beissinger, Thomas, 2012. "Fairness considerations in labor union wage setting: A theoretical analysis," FZID Discussion Papers 56-2012, University of Hohenheim, Center for Research on Innovation and Services (FZID).
  5. Hartmut Egger & Udo Kreickemeier, 2010. "Worker-specific Effects of Globalisation," The World Economy, Wiley Blackwell, vol. 33(8), pages 987-1005, 08.
  6. 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.
  7. 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.
  8. George Chouliarakis & Monica Correa-Lopez, 2012. "A Fair Wage Model of Unemployment with Inertia in Fairness Perceptions," Working Papers 1203, BBVA Bank, Economic Research Department.
  9. Addessi, William & Busato, Francesco, 2009. "Fair wages, labor relations and asset returns," Journal of Financial Stability, Elsevier, vol. 5(4), pages 410-430, December.
  10. Ansgar, Rannenberg, 2009. "Disinflation and the NAIRU in a New-Keynesian New-Growth Model (Extended Version)," MPRA Paper 13610, University Library of Munich, Germany.
  11. Ansgar Rannenberg, 2009. " Shocks, Monetary Policy and Institutions: Explaining Unemployment Persistence in "Europe" and the United States," CDMA Working Paper Series 0903, Centre for Dynamic Macroeconomic Analysis.

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