Data di Pubblicazione:
2015
Abstract:
Recent U.S. evidence suggests that the response of labor share to a productivity shock is
characterized by countercyclicality and overshooting. These findings cannot be reconciled
easily with existing business cycle models. We extend the Diamond–Mortensen–
Pissarides model of search in the labor market by considering strategic interactions among
an endogenous number of producers, which leads to countercyclical price markups.
Although Nash bargaining delivers a countercyclical labor share, we show that
countercyclical markups are fundamental to address the overshooting. On the contrary, we
find that real wage rigidity does not seem to play a crucial role in the dynamics of the
labor share of income.
characterized by countercyclicality and overshooting. These findings cannot be reconciled
easily with existing business cycle models. We extend the Diamond–Mortensen–
Pissarides model of search in the labor market by considering strategic interactions among
an endogenous number of producers, which leads to countercyclical price markups.
Although Nash bargaining delivers a countercyclical labor share, we show that
countercyclical markups are fundamental to address the overshooting. On the contrary, we
find that real wage rigidity does not seem to play a crucial role in the dynamics of the
labor share of income.
Tipologia CRIS:
1.1 Articolo in rivista
Keywords:
Labor Share Overshooting, Endogenous Market Structures, Search and
Matching Frictions
Elenco autori:
Rossi, Lorenza; Colciago, Andrea
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