Kiel Working Papers, Kiel Institute for World Economics
No 1733:
Matching labor’s share in a search and matching model
Christopher Reicher
Abstract: I evaluate the degree to which different wage-setting
mechanisms in labor market search models can fit the aggregate facts on
labor’s share. I find that staggered bargaining in nominal wages best
allows the model to plausibly match the negative relationship between
labor’s share and lagged productivity growth and inflation. I also evaluate
the role of labor’s bargaining weight—a low bargaining weight seems
plausible but by itself, it cannot generate the patterns observed in the
data. Adding a standard sticky-price mechanism to the model actually
degrades the match between the model and the data—in the data, labor’s
share is countercyclical, while it is procyclical in the sticky-price
model. Theory and data both agree that wage stickiness is relevant at the
micro and macro levels
Keywords: Sticky wages, sticky prices, staggered Nash bargaining, inflation, productivity, search and matching, labor’s share; (follow links to similar papers)
JEL-Codes: E24,; E25,; J23,; J31; (follow links to similar papers)
35 pages, September 2011
Before downloading any of the electronic versions below
you should read our statement on
copyright.
Download GhostScript
for viewing Postscript files and the
Acrobat Reader for viewing and printing pdf files.
Downloadable files:
matching-labor-s-share-in-a-search-and-matching-model.pdf 
Download Statistics
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Programing by
Design Joakim Ekebom
