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Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting

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  • Jonathan Thomas
  • Andy Snell

Abstract

This paper analyses a model with downward rigidities in which firms cannot pay discriminate based on year of entry to a firm, and develops an equilibrium model of wages and unemployment. We solve for the dynamics of wages and unemployment under conditions of downward wage rigidity, where forward looking firms take into account these constraints. Using simulated productivity data based on the post-war US economy, we analyse the ability of the model to match certain stylised labour market facts.

Suggested Citation

  • Jonathan Thomas & Andy Snell, 2007. "Real and Nominal Wage Rigidity in a Model of Equal-Treatment Contracting," CDMA Conference Paper Series 0708, Centre for Dynamic Macroeconomic Analysis.
    • Handle: RePEc:san:cdmacp:0708
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    Cited by:

    1. Reicher, Christopher Phillip, 2011. "Sticky wages in search and matching models in the short and long run," Kiel Working Papers 1722, Kiel Institute for the World Economy (IfW Kiel).
    2. Reicher, Christopher Phillip, 2010. "Evaluating the search and matching model with sticky wages," Kiel Working Papers 1674, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Labour contracts; business cycle; unemployment; equal treatment; downward rigidity; cross-contract restrictions.;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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