Cyclical wages in a search-and-bargaining model with large firms
By: Julio J. Rotemberg
Contributors: National Bureau of Economic Research
Series: NBER working paper series -- working paper 12415; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 12415.
Publisher: National Bureau of Economic Research
Published: 2006
Place of publication: Cambridge, MA
Language: eng
Format: [electronic resource] /
Description: "This paper presents a complete general equilibrium model with flexible wages where the degree to which wages and productivity change when cyclical employment changes is roughly consistent with postwar U.S.  data.  Firms with market power are assumed to bargain simultaneously with many employees, each of whom finds himself matched with a firm only after a process of search.  When employment increases as a result of reductions in market power, the marginal product of labor falls.  This fall tempers the bargaining power of workers and thus dampens the increase in their real wages.  The procyclical movement of wages is dampened further if the posting of vacancies is subject to increasing returns"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 8/16/2006.

Includes bibliographical references.

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