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A Cointegration Model for Search Equilibrium Wage Formation

Author

Listed:
  • L. Broersma

    (Department of Economics and Department of Spatial Science, University of Groningen)

  • Frank A.G. den Butter

    (Department of Economics, Vrije Universiteit Amsterdam)

  • Udo Kock

    (International Monetary Fund, Washington)

Abstract
This discussion paper resulted in a publication in the Journal of Applied Economics , 9, 235-54. In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective our study presents an econometric analysis of the influence of labor market flows on wage formation as alternative to the traditional specification of wage equations where unemployment represents the Phillips-curve or wage curve-effects. We estimate a dynamic wage equation for the Netherlands using a cointegration approach. We find that labor flows, and notably flows from outside the labor market, are important determinants for both short run and long run wage setting

Suggested Citation

  • L. Broersma & Frank A.G. den Butter & Udo Kock, 2003. "A Cointegration Model for Search Equilibrium Wage Formation," Tinbergen Institute Discussion Papers 03-088/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20030088
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    References listed on IDEAS

    as
    1. Dale T. Mortensen, 1982. "The Matching Process as a Noncooperative Bargaining Game," NBER Chapters, in: The Economics of Information and Uncertainty, pages 233-258, National Bureau of Economic Research, Inc.
    2. Lourens Broersma & Frank A. G. Den Butter, 2001. "Labour Flows as Determinants of the Wage–Price Spiral: An Empirical Analysis for The Netherlands," LABOUR, CEIS, vol. 15(2), pages 279-294, June.
    3. Lars Ljungqvist & Thomas J. Sargent, 1998. "The European Unemployment Dilemma," Journal of Political Economy, University of Chicago Press, vol. 106(3), pages 514-550, June.
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    6. Christopher A. Pissarides, 2000. "Equilibrium Unemployment Theory, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262161877, April.
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    Citations

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    Cited by:

    1. Katarzyna Budnik, 2012. "Do those who stay work less? On the impact of emigration on the measured TFP in Poland," NBP Working Papers 113, Narodowy Bank Polski.
    2. Kees Folmer, 2009. "Why do macro wage elasticities diverge? A meta analysis," CPB Discussion Paper 122, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Katarzyna Budnik, 2008. "Search Equilibrium with Migration: the Case of Poland," NBP Working Papers 45, Narodowy Bank Polski.

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    More about this item

    Keywords

    Wage curve; Labour market flows; Cointegration model;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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