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Reduced form wage equations in the credible bargaining model

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  • Boitier, Vincent
  • Lepetit, Antoine

Abstract

We derive an explicit solution for the wage from an alternating-offer wage bargaining game à la Hall and Milgrom (2008) under a plausible parameter restriction. This solution is simple, micro-founded and permits a transparent analysis of the driving forces of wages. When it is used in a stationary steady-state search and matching model, the value of all endogenous variables can be expressed as a function of the parameters of the model and the exogenous variables. In a dynamic setup, the solution is much simpler to implement than the one found in the original paper of Hall and Milgrom (2008).

Suggested Citation

  • Boitier, Vincent & Lepetit, Antoine, 2018. "Reduced form wage equations in the credible bargaining model," Labour Economics, Elsevier, vol. 50(C), pages 92-96.
    • Handle: RePEc:eee:labeco:v:50:y:2018:i:c:p:92-96
    DOI: 10.1016/j.labeco.2016.04.003
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    References listed on IDEAS

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    1. Christopher A. Pissarides & Barbara Petrongolo, 2001. "Looking into the Black Box: A Survey of the Matching Function," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 390-431, June.
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    6. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, December.
    7. Robert E. Hall & Paul R. Milgrom, 2008. "The Limited Influence of Unemployment on the Wage Bargain," American Economic Review, American Economic Association, vol. 98(4), pages 1653-1674, September.
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    9. Shimer, Robert, 2006. "On-the-job search and strategic bargaining," European Economic Review, Elsevier, vol. 50(4), pages 811-830, May.
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    Cited by:

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    3. Martin, Christopher & Wang, Bingsong, 2020. "Search, shirking and labor market volatility," Journal of Macroeconomics, Elsevier, vol. 66(C).

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