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Reference Dependence and Labor-Market Fluctuations

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  • Eliaz, Kfir
  • Spiegler, Rani

Abstract

We incorporate reference-dependent preferences into a search-and-matching model of the labor market, in which firms have all the bargaining power and productivity follows an AR(1) process. Motivated by Akerlof (1982) and Bewley (1999), we assume that existing workers are willing to exert unobserved,

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8997.

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Date of creation: May 2012
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Handle: RePEc:cpr:ceprdp:8997

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Keywords: Negative-Reciprocity; Reference-Dependence; Search and Matching; Shimer Puzzle; Social Preferences; Wage Rigidity;

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References

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Citations

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Cited by:
  1. Kfir Eliaz & Ran Spiegler, 2013. "Reference Dependence and Labor Market Fluctuations," NBER Chapters, in: NBER Macroeconomics Annual 2013, Volume 28, pages 159-200 National Bureau of Economic Research, Inc.
  2. Vincent Boitier, 2013. "The Unemployment Volatility Puzzle: a Note on the Role of Reference Points," Working Papers hal-00878107, HAL.
  3. Holger Herz & Dmitry Taubinsky, 2013. "Market experience is a reference point in judgments of fairness," ECON - Working Papers 128, Department of Economics - University of Zurich.
  4. David Freeman, 2013. "Revealed Preference Foundations of Expectations-Based Reference-Dependence," Working Papers dp13-10, CRABE, Department of Economics, Simon Fraser University.
  5. Rosato, Antonio, 2013. "Selling Substitute Goods to Loss-Averse Consumers: Limited Availability, Bargains and Rip-offs," MPRA Paper 47168, University Library of Munich, Germany.

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