Does intra-firm bargaining matter for business cycle dynamics?
We analyse the implications of intra-firm bargaining for business cycle dynamics in models with large firms and search frictions. Intra-firm bargaining implies a feedback effect from the marginal revenue product to wage setting which leads firms to over-hire in order to reduce workers' bargaining position within the firm. The key to this effect are decreasing returns and/or downward-sloping demand. We show that equilibrium wages and employment are higher in steady state compared to a bargaining framework in which firms neglect this feedback. However, the effects of intra-firm bargaining on adjustment dynamics, volatility and comovement are negligible.
|Date of creation:||2007|
|Date of revision:|
|Contact details of provider:|| Postal: Postfach 10 06 02, 60006 Frankfurt|
Phone: 0 69 / 95 66 - 34 55
Fax: 0 69 / 95 66 30 77
Web page: http://www.bundesbank.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Merz, Monika, 1995. "Search in the labor market and the real business cycle," Journal of Monetary Economics, Elsevier, vol. 36(2), pages 269-300, November.
- Monique Ebell & Christian Haefke, 2002.
"Product Market Deregulation and Labor Market Outcomes,"
02.08, Swiss National Bank, Study Center Gerzensee.
- Monique Ebell & Christian Haefke, 2002. "Product market deregulation and labor market outcomes," Economics Working Papers 726, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2003.
- Ebell, Monique & Haefke, Christian, 2003. "Product Market Deregulation and Labor Market Outcomes," IZA Discussion Papers 957, Institute for the Study of Labor (IZA).
- Eric Smith, 1999.
"Search, Concave Production, and Optimal Firm Size,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 2(2), pages 456-471, April.
- Matthias S. Hertweck, 2006.
"Strategic Wage Bargaining, Labor Market Volatility, and Persistence,"
Economics Working Papers
ECO2006/42, European University Institute.
- Hertweck Matthias Sebastian, 2013. "Strategic wage bargaining, labor market volatility, and persistence," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 27, October.
- Matthias S. Hertweck, 2011. "Strategic Wage Bargaining, Labor Market Volatility, and Persistence," Working Paper Series of the Department of Economics, University of Konstanz 2011-26, Department of Economics, University of Konstanz.
- Cahuc, Pierre & Wasmer, Etienne, 2001. "Does Intrafirm Bargaining Matter In The Large Firm'S Matching Model?," Macroeconomic Dynamics, Cambridge University Press, vol. 5(05), pages 742-747, November.
- Rotemberg, Julio J., 2006.
"Cyclical Wages in a Search-and-Bargaining Model with Large Firms,"
CEPR Discussion Papers
5791, C.E.P.R. Discussion Papers.
- Julio J. Rotemberg, 2006. "Cyclical wages in a search-and-bargaining model with large firms," Proceedings, Federal Reserve Bank of San Francisco.
- Julio J. Rotemberg, 2008. "Cyclical Wages in a Search-and-Bargaining Model with Large Firms," NBER Chapters, in: NBER International Seminar on Macroeconomics 2006, pages 65-114 National Bureau of Economic Research, Inc.
- Julio J. Rotemberg, 2006. "Cyclical Wages in a Search-and-Bargaining Model with Large Firms," NBER Working Papers 12415, National Bureau of Economic Research, Inc.
- Julio J. Rotemberg, 2006. "Cyclical wages in a search and bargaining model with large firms," Working Papers 06-5, Federal Reserve Bank of Boston.
- Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
- repec:cup:macdyn:v:5:y:2002:i:05:p:742-747_03 is not listed on IDEAS
- Andolfatto, David, 1996. "Business Cycles and Labor-Market Search," American Economic Review, American Economic Association, vol. 86(1), pages 112-32, March.
- Antonella Trigari, 2009.
"Equilibrium Unemployment, Job Flows, and Inflation Dynamics,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 41(1), pages 1-33, 02.
- Trigari, Antonella, 2004. "Equilibrium unemployment, job flows and inflation dynamics," Working Paper Series 0304, European Central Bank.
- Oliver Jean Blanchard & Peter Diamond, 1989. "The Beveridge Curve," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 20(1), pages 1-76.
- Krause, M.U. & Lubik, T.A., 2003.
"The (Ir)relevance of Real Wage Rigidity in the New Keynesian Model with Search Frictions,"
2003-113, Tilburg University, Center for Economic Research.
- Krause, Michael U. & Lubik, Thomas A., 2007. "The (ir)relevance of real wage rigidity in the New Keynesian model with search frictions," Journal of Monetary Economics, Elsevier, vol. 54(3), pages 706-727, April.
- Thomas Lubik & Michael Krause, 2003. "The (Ir)relevance of Real Wage Rigidity in the New Keynesian Model with Search Frictions," Economics Working Paper Archive 504, The Johns Hopkins University,Department of Economics.
- Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
- Pierre Cahuc & Francois Marque & Etienne Wasmer, 2008.
"A Theory Of Wages And Labor Demand With Intra-Firm Bargaining And Matching Frictions,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 49(3), pages 943-972, 08.
- Cahuc, Pierre & Marque, François & Wasmer, Etienne, 2004. "A Theory of Wages and Labour Demand with Intra-firm Bargaining and Matching Frictions," CEPR Discussion Papers 4605, C.E.P.R. Discussion Papers.
- Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, March.
- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
When requesting a correction, please mention this item's handle: RePEc:zbw:bubdp1:6138. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.