Numerous gift exchange experiments have found a positive wage-effort relationship. In (almost) all these experiments the employer both owns and controls the firm. This paper explores to what extent the separation of ownership and control affects the wage-effort relationship. We compare the standard bilateral gift exchange game between an owner-manager and a worker with two trilateral ones where...

Wage Mobility: Do Institutions Make a Difference? A Replication Study Comparing Portugal and the UK This study compares wage mobility in Portugal and the UK, replicating the work by Dickens (2000) and progressing to discuss the impact of differences in the institutional framework, which is more regulated and centralized in Portugal, with minimum wages, employment protection, and collective barg...

Why do some vacancies offer a posted wage whereas others offer a negotiable wage? The paper endogenizes the choice of wage policy in a search model with heterogeneous workers. In particular, we characterize the circumstances under which there exist an equilibrium where all firms negotiate wages. Generally, we find that a tight labor market favors bargaining over posting, as does large worker he...

A commonly held view is that nominal rigidities are important for the transmission of monetary policy shocks. We argue that they are also important for understanding the dynamic effects of technology shocks, especially on labor hours, wages, and prices. Based on a dynamic general equilibrium framework, our closed-form solutions reveal that a pure sticky-price model predicts correctly that hours...

This paper aims at contributing to the employment e ects of minimum wages in a unionised economy. In a dual labour market model, the rst sector outcome is characterised by bargaining between unions and rms, while in the second sector rms have to pay a statutory minimum wage. The model shows that a minimum wage increase has negative employment effects only if the bargaining outcome is described ...

This paper investigates when trade could cause the selection effect. Since the increased average real wage induced by trade triggers the selection effect in Melitz (2003), the main issue is the labor market conditions under which trade raises the average real wage. To identify the labor market conditions for the selection effect, this paper employs worker heterogeneity with respect to abilities...

Suppose that "uncertainty" about labor market conditions has increased. Does this change induce an unemployed worker to search longer, or shorter? This paper shows that the answer is drastically different depending on whether an increase in "uncertainty" is an increase in risk or that in true uncertainty in the sense of Frank Knight. We show in a general framework that, while an increase in ris...

In 1979 there were 3.7 million state government employees (SGE’s) in the United States, with a monthly payroll of $3.9 billion. This state government employment represented a sizable increase from the 1970 level of 2.8 million workers.’ Recent work by Smith [1977] provides evidence of a wage differential between SGE’s and private sector workers. She finds that (male) wage rates are about 8% hig...

This paper presents evidence on the extent of wage mobility both while working for the same firm and when moving to a new firm. We find that mean wage growth between jobs is large in comparison to wage growth while working for the same employer, especially for less educated workers who experience low mean wage growth between jobs but even lower wage growth while working for the same employer. T...

Matched employer-employee data exhibits both wage and productivity dispersion across firms and suggest that a linear relationship holds between the average wage paid and a firm productivity. The purpose of this paper is to demonstrate that these facts can be explained by a search and matching model when firms are heterogenous with respect to productivity, are composed of many workers, and face ...