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Efficiency in a search and matching model with right-to-manage bargaining

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  • Sunakawa, Takeki

Abstract

In a search and matching model with right-to-manage bargaining, matched workers and firms bargain over wages, given the firm’s demand schedule for hours per worker. Wages and hours per worker are determined as if they are determined in a competitive labor market with a distortion to wage markups. A positive inefficiency gap in the labor market diminishes workers’ effective bargaining power relative to firms, because firms can adjust labor input and wage schedule via the intensive margin. The Hosios condition does not necessarily hold even when workers’ actual bargaining power is equal to the unemployment elasticity of matches.

Suggested Citation

  • Sunakawa, Takeki, 2012. "Efficiency in a search and matching model with right-to-manage bargaining," Economics Letters, Elsevier, vol. 117(3), pages 679-682.
  • Handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:679-682 DOI: 10.1016/j.econlet.2011.12.072
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    References listed on IDEAS

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    More about this item

    Keywords

    Search and matching model; Right-to-manage bargaining; Efficiency;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • L6 - Industrial Organization - - Industry Studies: Manufacturing

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