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Reference Dependence and Labor-Market Fluctuations

  • Eliaz, Kfir
  • Spiegler, Ran

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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