Sequential bargaining in a new-Keynesian model with frictional unemployment and staggered wage negotiation

Arbeitspapier

We consider a model with frictional unemployment and staggered wage bargaining where hours worked are negotiated every period. The workers’ bargaining power in the hours negotiation affects both unemployment volatility and inflation persistence. The closer to zero this parameter, (i) the more firms adjust on the intensive margin, reducing employment volatility, (ii) the lower the effective workers’ bargaining power for wages and (iii) the more important the hourly wage in the marginal cost determination. This set-up produces realistic labor market statistics together with inflation persistence. Distinguishing the probability to bargain the wage of the existing and the new jobs, we show that the intensive margin helps reduce the new entrants wage rigidity required to match observed unemployment volatility.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 1007

Classification and Topics

• Classification: Wirtschaft ; Price Level; Inflation; Deflation ; Business Fluctuations; Cycles ; Monetary Policy ; Unemployment: Models, Duration, Incidence, and Job Search
• Subject: DSGE ; monetary policy ; Nominal Wage Rigidity ; Search and matching ; Lohnrigidität ; Tarifverhandlungen ; Geldpolitik ; Lohnstückkosten ; Dynamisches Gleichgewicht ; Theorie ; USA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): de Walque, Gregory ; Pierrard, Olivier ; Sneessens, Henri ; Wouters, Raf
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/153441
• Last update: 10.03.2025, 11:45 AM CET