Title: Credible Threats in a Wage Bargaining Model with on-the-job Search
Abstract:In standard equilibrium search models with strategic wage bargaining and on-the-job search, renegotiation is permitted without requirement of a credible threat. Workers trigger renegotiation whenever ...In standard equilibrium search models with strategic wage bargaining and on-the-job search, renegotiation is permitted without requirement of a credible threat. Workers trigger renegotiation whenever they have a new outside option that could raise their wages. In this note I modify the model to be consistent with renegotiation by mutual agreement and I show that estimating the model without imposing credible threats for renegotiation generates downward bias in the estimates of the bargaining power.Read More
Publication Year: 2011
Publication Date: 2011-01-01
Language: en
Type: preprint
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