| Author: | Croix, D. de la Palm, F. C. Pfann, G. A. |
| Title: | A dynamic contracting model for wages and employment in three European economies |
| Journal: | European Economic Review
1996 : FEB, VOL. 40:2, p. 429-448 |
| Index terms: | ADJUSTMENT COSTS BARGAINING EFFECTIVENESS EUROPE |
| Language: | eng |
| Abstract: | A structural dynamic non-linear model for an efficient contracting btw. a firm facing adjustment costs on labour and a union having preferences which are subject to habit formation is presented in the paper. The model's first-order necessary conditions are estimated for French, Dutch and the Belgian labour market. Estimation results turned out to be remarkably similar for the three countries involved. There are two alternative hypothesis investigated: 1) A myopic behaviour of the union. 2) A competitive labour market. The performance of the efficient contract model is found to be superior to the neo-classical model. |
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