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- Title
WAGE BARGAINING WITH ON-THE-JOB SEARCH: THEORY AND EVIDENCE.
- Authors
Cahuc, Pierre; Postel-Vinay, Fabien; Robin, Jean-Marc
- Abstract
Most applications of Nash bargaining over wages ignore between-employer competition for labor services and attribute all of the workers' rent to their bargaining power. In this paper, we write and estimate an equilibrium model with strategic wage bargaining and on-the-job search and use it to take another look at the determinants of wages in France. There are three essential determinants of wages in our model: productivity, competition between employers resulting from on-the-job search, and the workers' bargaining power. We find that between-firm competition matters a lot in the determination of wages, because it is quantitatively more important than wage bargaining a la Nash in raising wages above the workers' "reservation wages," defined as out-of-work income. In particular, we detect no significant bargaining power for intermediate- and low-skilled workers, and a modestly positive bargaining power for high-skilled workers.
- Subjects
FRANCE; LABOR service; WAGES; JOB hunting; EMPLOYERS; EMPLOYEES
- Publication
Econometrica, 2006, Vol 74, Issue 2, p323
- ISSN
0012-9682
- Publication type
Article
- DOI
10.1111/j.1468-0262.2006.00665.x