Search Frictions and the Labor Wedge

Search Frictions and the Labor Wedge
Author: Mr.Andrea Pescatori
Publisher: International Monetary Fund
Total Pages: 31
Release: 2011-05-01
Genre: Business & Economics
ISBN: 1455262404

This paper shows that labor market search frictions do not explain fluctuations in the labor wedge per se. However, the introduction of extensive and intensive margin clarifies that measuring the MRS in terms of total hours artificially introduces procyclicality in the MRS. When the MRS is correctly measured in terms of hours per worker, the labor wedge obtained is less variable than the one of the competitive model. Finally, we show that it is possible to measure a strongly procyclical labor wedge when the actual data generating process is a search model that allows for movements in both margins.

Labor, Credit, and Goods Markets

Labor, Credit, and Goods Markets
Author: Nicolas Petrosky-Nadeau
Publisher: MIT Press
Total Pages: 271
Release: 2017-11-10
Genre: Business & Economics
ISBN: 0262036452

An integrated framework to study the theoretical and quantitative properties of economies with frictions in labor, financial, and goods markets. This book offers an integrated framework to study the theoretical and quantitative properties of economies with frictions in multiple markets. Building on analyses of markets with frictions by 2010 Nobel laureates Peter A. Diamond, Dale T. Mortensen, and Christopher A. Pissarides, which provided a new theoretical approach to search markets, the book applies this new paradigm to labor, finance, and goods markets. It shows, in particular, how frictions in different markets interact with each other. The book first covers the main developments in the analysis of the labor market in the presence of frictions, offering a systematic analysis of the dynamics of this environment and explaining the notion of macroeconomic volatility. Then, building on the generality and simplicity of the search analysis, the book adapts it to other markets, developing the tools and concepts to analyze friction in these markets. The book goes beyond the traditional general equilibrium analysis of markets, which is often frictionless. It begins with the standard analysis of a single market, and then sequentially integrates more markets into the analysis, progressing from labor to financial to goods markets. Along the way, the book provides a number of useful results and insights, including the existence of a direct link between search frictions and the degree of volatility in the economy.

Search Frictions, Efficiency Wages and Equilibrium Unemployment

Search Frictions, Efficiency Wages and Equilibrium Unemployment
Author: Christopher Martin
Publisher:
Total Pages: 0
Release: 2019
Genre:
ISBN:

This paper explores the decomposition of equilibrium unemployment into involuntary and frictional components using a model that combines efficiency wages with search and matching frictions in the labour market. In deriving our results we generalize the celebrated Solow Condition, expressing the wage as the sum of a pure efficiency wage component and a component that reflects search frictions. Using standard values of calibrated parameters, we find that the bulk of unemployment is involuntary.

A Theory of Wages and Labor Demand with Intra-Firm Bargaining and Matching Frictions

A Theory of Wages and Labor Demand with Intra-Firm Bargaining and Matching Frictions
Author: Pierre Cahuc
Publisher:
Total Pages: 0
Release: 2008
Genre:
ISBN:

This article provides a model of labor market equilibrium with search and within-firm strategic bargaining. We yield explicit closed form solutions with heterogeneous labor inputs and capital. The solution exhibits overemployment. We show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups, with such other groups being underemployed instead if they have a lower relative bargaining power. Similarly, the hold-up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital.

Productivity Bargaining

Productivity Bargaining
Author: E. Owen Smith
Publisher: Pan
Total Pages: 456
Release: 1971
Genre: Business & Economics
ISBN:

Case study of productivity-based collective bargaining in the iron and steel industry of the UK to illustrate its effects on economic growth and wage structure - covers the role of trade unions, labour force problems, competition, the elimination of restrictive practices, etc. Bibliography pp. Xi to xiv and statistical tables.