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Multi-Levels Bargaining and Efficiency in Search Economies


  • Olivier Lharidon

    (University of Rennes 1 - CREM-CNRS)

  • Franck Malherbet

    (Ecole Polytechnique)


In this note, we extend the traditional search and matching framework to take account of the different levels at which negotiations may take place. We show that, in the absence of any distortion, sector-level bargaining ought to be less efficient than bargaining taking place at the other levels. This type of inefficiency leaves room for labor market policies. We show that a well designed combination of employment protection, hiring subsidy and payroll tax is able to restore efficiency. In addition, this result suggests that the relationship between the labor market performance and the level at which bargaining takes place is conditional on labor market institutions.

Suggested Citation

  • Olivier Lharidon & Franck Malherbet, 2011. "Multi-Levels Bargaining and Efficiency in Search Economies," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201124, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
  • Handle: RePEc:tut:cremwp:201124

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    References listed on IDEAS

    1. Richard Rogerson & Robert Shimer & Randall Wright, 2004. "Search-Theoretic Models of the Labor Market-A Survey," NBER Working Papers 10655, National Bureau of Economic Research, Inc.
    2. Delacroix, Alain, 2006. "A multisectorial matching model of unions," Journal of Monetary Economics, Elsevier, vol. 53(3), pages 573-596, April.
    3. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, January.
    4. Davis, Steven J. & Haltiwanger, John, 1999. "Gross job flows," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 41, pages 2711-2805 Elsevier.
    5. Robert J. Flanagan, 1999. "Macroeconomic Performance and Collective Bargaining: An International Perspective," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1150-1175, September.
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    More about this item


    Search and Matching Models; Bargaining Levels; Labor Market Policies;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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