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Bargaining Versus Efficiency Wages in a Dynamic Labor Market: A Synthesis

  • Strand, J.

We construct a model integrating the efficiency wage model of Shapiro-Stiglitz (1984) with the matching-bargaining models of Diamond, Mortensen and Pissarides (DMP). Firms and workers form pairwise matches, workers may shirk on the job, and the wage is set in an asymmetric Nash bargain over the surplus created by nonshirking. The wage is then always higher, and employment lower, than in both the corresponding Shapiro=Stiglitz and DMP models.

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File URL: https://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/1998/Memo-22-1998.pdf
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Paper provided by Oslo University, Department of Economics in its series Memorandum with number 22/1998.

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Length: 31 pages
Date of creation: 1998
Date of revision:
Handle: RePEc:hhs:osloec:1998_022
Contact details of provider: Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Web page: http://www.oekonomi.uio.no/indexe.html
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  1. Carmichael, Lorne, 1985. "Can Unemployment Be Involuntary? Comment [Equilibrium Unemployment as a Worker Discipline Device]," American Economic Review, American Economic Association, vol. 75(5), pages 1213-14, December.
  2. Ellingsen, T. & Rosen, A., 1997. "Fixed or Flexible? Wage Setting in Search Equilibrium," Papers 1997-17, Uppsala - Working Paper Series.
  3. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-20, September.
  4. Strand, J., 1992. "Employment and Wages with deferred Wage Payments in Models of Worker Moral Hazard," Memorandum 07/1992, Oslo University, Department of Economics.
  5. MacLeod, W Bentley & Malcomson, James M, 1989. "Implicit Contracts, Incentive Compatibility, and Involuntary Unemployment," Econometrica, Econometric Society, vol. 57(2), pages 447-80, March.
  6. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Wiley Blackwell, vol. 49(2), pages 217-27, April.
  7. Albrecht, James W & Vroman, Susan B, 1998. "Nash Equilibrium Efficiency Wage Distributions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 183-203, February.
  8. Ordover, Janusz A. & Shapiro, Carl, 1983. "Advances in Supervision Technology and Economic Welfare: A General Equilibrium Analysis," Working Papers 83-18, C.V. Starr Center for Applied Economics, New York University.
  9. Strand, Jon, 1987. "Unemployment as a Discipline Device with Heterogeneous Labor [Equilibrium Unemployment as a Worker Discipline Device]," American Economic Review, American Economic Association, vol. 77(3), pages 489-93, June.
  10. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  11. Strand, Jon, 1991. "Unemployment and Wages under Worker Moral Hazard with Firm-Specific Cycles," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 32(3), pages 601-12, August.
  12. Dale T. Mortensen, 1978. "Specific Capital, Bargaining, and Labor Turnover," Discussion Papers 320, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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