Bargaining Equilibrium in a Non-Stationary Environment

No abstract.

Equilibrium Search with Multiple Attributes and the Impact of Equal Opportunities for Women

This paper considers equilibrium two-sided search with ex ante heterogeneous agents, vectors of attributes, and idiosyncratic match draws. The analysis applies to a large class of models, from the nontransferable utility case to the collective household model with bargaining, for which transferable utility is a special case. The approach is powerful for it identifies a simple algorithm that, in our numerical application, is found to rapidly converge to equilibrium. Our application explores the impact of equal opportunities for women in the labor market on female match incentives and the timing of marriage

Equilibrium Search with Multiple Attributes and the Impact of Equal Opportunities for Women

This paper considers equilibrium two-sided search with ex ante heterogeneous agents, vectors of attributes, and idiosyncratic match draws. The analysis applies to a large class of models, from the nontransferable utility case to the collective household model with bargaining, for which transferable utility is a special case. The approach is powerful for it identifies a simple algorithm that, in our numerical application, is found to rapidly converge to equilibrium. Our application explores the impact of equal opportunities for women in the labor market on female match incentives and the timing of marriage

Equilibrium Labor Turnover, Firm Growth, and Unemployment

This paper considers equilibrium quit turnover in a frictional labor market with costly hiring by firms, where large firms employ many workers and face both aggregate and firm specific productivity shocks. There is exogenous firm turnover as new (small) startups enter the market over time, while some existing firms fail and exit. Individual firm growth rates are disperse and evolve stochastically. The paper highlights how dynamic monopsony, where firms trade off lower wages against higher (endogenous) employee quit rates, yields excessive job-to-job quits. Such quits directly crowd out the reemployment prospects of the unemployed. With finite firm productivity states, stochastic equilibrium is fully tractable and can be computed using standard numerical techniques

Opportunities for Women ∗

Economics, University of Essex, for private circulation to interested readers. They often represent preliminary reports on work in progress and should therefore be neither quoted nor referred to in published work without the written consent of the author. Equilibrium Search and the Impact of Equa

Equilibrium Wage and Employment Dynamics in a Model of Wage Posting without Commitment

A rich but tractable variant of the Burdett-Mortensen model of wage setting behavior is formulated and a dynamic market equilibrium solution to the model is defined and characterized. In the model, firms cannot commit to wage contracts. Instead, the Markov perfect equilibrium to the wage setting game, characterized by Coles (2001), is assumed. In addition, firm recruiting decisions, firm entry and exit, and transitory firm productivity shocks are incorporated into the model. Given that the cost of recruiting workers is proportional to firm employment, we establish the existence of an equilibrium solution to the model in which wages are not contingent on firm size but more productive employers always pay higher wages. Although the state space, the distribution of workers over firms, is large in the general case, it reduces to a scalar that can be interpreted as the unemployment rate in the special case of homogenous firms. Furthermore, the equilibrium is unique. As the dimension of the state space is equal to the number of firms types in general, an (approximate) equilibrium is computable.

Equilibrium Wage Dispersion, Firm Size and Growth

This paper analyses a model of equilibrium wage dynamics and wage dispersion across firms. It considers a labour market where firms set wages and workers use on-the-job search to look for better paid work. It analyses a perfect equilibrium where each firm can change its wage paid at any time, and workers use optimal quit strategies. Firms trade off higher wages against a lower quit rate and large firms (those with more employees) always pay higher wages than small firms. Non steady state dispersed price equilibria are also analysed which descrive how wages vary as each firm and the industry as a whole grows over time. (Copyright: Elsevier)on-the-job search, wage dispersion, perfect equilibrium

Decentralized Trade, Entrepreneurial Investment and the Theory of Unemployment

This paper considers an equilibrium model of unemployment in a labour market where all vacancies are advertised in a newspaper. Unemployment occurs in occupations that are short on vacancies. New vacancies are created by entrepreneurial search and investment, so it may take some time before an unemployed worker finds a job. Wages are determined by bargaining. A unique rational expectations equilibrium is shown to exist. The unemployment-vacancy dynamics are consistent with so-called Beveridge curves. Individual unemployment spells can be long – especially in low turnover markets – while markets with high turnover experience large variations in unemployment and little wage variation. Although this latter case appears to exhibit ‘sticky wages’, this market outcome is (asymptotically) fully efficient. Although the appropriate government policy is to subsidize entrepreneurial investment (there is a wage bargaining distortion and a search externality), simulations show that the required subisidies are very small for appropriate parameter values. A laissez-faire policy is (almost) optimal even with unemployment spells as long as a year in some markets.Efficiency; Investment; Search; Unemployment