Abstract
This paper shows that the ability of the credible wage bargaining model to match the observed unemployment volatility hinges on an unrealistic assumption about disagreement payoffs to the firm. Relaxing this assumption can lead to the substantial wage flexibility. As a consequence, the model is unable to capture the observed unemployment volatility.
Publisher
Cambridge University Press (CUP)
Subject
Economics and Econometrics
Cited by
1 articles.
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1. The fundamental surplus revisited;Review of Economic Dynamics;2022-11