A Cointegration Model for Search Equilibrium Wage Formation

May 1, 2004

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Format: Chicago

A Cointegration Model for Search Equilibrium Wage Formation, (USA: International Monetary Fund, 2004) accessed November 8, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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, this paper presents an econometric analysis of the influence of labor market flows on wage formation as an alternative to the traditional specification of wage equations in which unemployment represents Phillipscurve or wage-curve effects. The paper estimates a dynamic wage equation for the Netherlands using a cointegration approach. It finds that labor flows, and notably flows from outside the labor market, are important determinants of both short-run and long-run wage setting.

Subject: Labor markets, Unemployment, Wage adjustments, Wage setting, Wages

Keywords: Income stream, Phillips curve, WP

Publication Details

Pages:

19
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/092
Stock No:

WPIEA0922004
ISBN:

9781451851625
ISSN:

1018-5941

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