Unemployment fluctuations with staggered nash wage bargaining

Mark Gertler, Antonella Trigari

    Research output: Contribution to journalArticle

    Abstract

    A number of authors have argued that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity over the business cycle. We address this issue by modifying the Mortensen-Pissarides framework to allow for staggered multiperiod wage contracting. What emerges is a tractable relation for wage dynamics that is a natural generalization of the period-by-period Nash bargaining outcome in the conventional formulation. We then show that a reasonable calibration of the model can account for the cyclical behavior of wages and labor market activity observed in the data.

    Original languageEnglish (US)
    Pages (from-to)38-86
    Number of pages49
    JournalJournal of Political Economy
    Volume117
    Issue number1
    DOIs
    StatePublished - Feb 2009

    Fingerprint

    Labour market
    Fluctuations
    Wage bargaining
    Wages
    Market activity
    Unemployment
    Business cycles
    Calibration
    Unemployment dynamics
    Nash bargaining
    Contracting
    Wage dynamics

    ASJC Scopus subject areas

    • Economics and Econometrics

    Cite this

    Unemployment fluctuations with staggered nash wage bargaining. / Gertler, Mark; Trigari, Antonella.

    In: Journal of Political Economy, Vol. 117, No. 1, 02.2009, p. 38-86.

    Research output: Contribution to journalArticle

    Gertler, Mark ; Trigari, Antonella. / Unemployment fluctuations with staggered nash wage bargaining. In: Journal of Political Economy. 2009 ; Vol. 117, No. 1. pp. 38-86.
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