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Credible threats in a wage bargaining model with on-the-job search

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  • Bartolucci, Cristian

Abstract

This note shows that in standard equilibrium search models with strategic wage bargaining and on-the-job search, renegotiation does not require mutual consent. If the worker needs a credible threat to trigger renegotiation, wages are renegotiated less frequently than in the original model.

Suggested Citation

  • Bartolucci, Cristian, 2012. "Credible threats in a wage bargaining model with on-the-job search," Economics Letters, Elsevier, vol. 117(3), pages 657-659.
    • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:657-659
    DOI: 10.1016/j.econlet.2012.08.029
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    1. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "The Distribution of Earnings in an Equilibrium Search Model with State-Dependent Offers and Counteroffers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 989-1016, November.
    2. Pierre Cahuc & Fabien Postel-Vinay & Jean-Marc Robin, 2006. "Wage Bargaining with On-the-Job Search: Theory and Evidence," Econometrica, Econometric Society, vol. 74(2), pages 323-364, March.
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    4. Fabien Postel-Vinay & Hélène Turon, 2010. "On-The-Job Search, Productivity Shocks, And The Individual Earnings Process," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 51(3), pages 599-629, August.
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    6. Fabien Postel-Vinay & Jean-Marc Robin, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," Econometrica, Econometric Society, vol. 70(6), pages 2295-2350, November.
    7. Christopher J. Flinn, 2006. "Minimum Wage Effects on Labor Market Outcomes under Search, Matching, and Endogenous Contact Rates," Econometrica, Econometric Society, vol. 74(4), pages 1013-1062, July.
    8. Cristian Bartolucci, 2013. "Gender Wage Gaps Reconsidered: A Structural Approach Using Matched Employer-Employee Data," Journal of Human Resources, University of Wisconsin Press, vol. 48(4), pages 998-1034.
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    Cited by:

    1. Lukesch, Veronika & Zwick, Thomas, 2021. "Outside options drive wage inequalities in continuing jobs: Evidence from a natural experiment," ZEW Discussion Papers 21-003, ZEW - Leibniz Centre for European Economic Research.
    2. Veronika Lukesch & Thomas Zwick, 2024. "Do outside options drive wage inequalities in retained jobs? Evidence from a natural experiment," British Journal of Industrial Relations, London School of Economics, vol. 62(1), pages 127-153, March.

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    More about this item

    Keywords

    Credible threats; On-the-job search; Wage renegotiation;
    All these keywords.

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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