Long memory, Consistent expectations, Perpetual learning, Present-value models
Bargaining and Wage Rigidity in a Matching Model for the US
Oxford Bulletin of Economics and Statistics
This paper uses robust econometric methods to assess previous empirical results for the Mortensen and Pissarides (1994) matching model. Assuming all wages are negotiated each period is inconsis- tent with the history dependence in US wages, even allowing for heterogeneous match productiv- ities, time to build vacancies and credible bargaining. Flexible wages for job changers, with rigid wages for job stayers, allows the model to capture this history dependence and is not inconsistent with parameter calibrations in the literature. Such wage rigidity affects only the timing of wage payments over the duration of matches; conclusions about other characteristics are unaffected by it.
Matching frictions, wage bargaining, history dependence, wage rigidity, weak instruments
Nash Bargaining, Credible Bargaining and Efficiency Wages in a Matching Model for the US
This paper incorporates Nash bargaining, credible bargaining and efficiency wages as special cases of an over-arching model of wage determination in a matching model that is used to assess econometrically how well each fits US data. With Nash bargaining, estimates for worker bargaining power and the value of non-work activity are almost identical to those calibrated by Hagedorn and Manovskii (2008). However, the over-identifying restrictions are overwhelmingly rejected statistically, as they are for credible bargaining. Efficiency wages fit the data better, with the over-identifying restrictions not rejected statistically, and result in a lower, more plausible estimated value of non-work activity.