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| Author: | Sabourian, H. |
| Title: | Wage norms and involuntary unemployment. |
| Journal: | Economic Journal
1988 : VOL. 98:390, CONFERENCE PAPERS, p. 177-188 |
| Index terms: | UNEMPLOYMENT PAY STRIKES ECONOMETRIC MODELS |
| Language: | eng |
| Abstract: | A common feature of existing modelling attempts to explain the possibility of equilibrium wages is a hypothesis that involuntary unemployment does not lead any agent to change its behavior. A model is developed which is based on the distinction between "insiders" and "outsiders". Workers and firms live for more than one period in this model. As a result it is possible to separate short-term and long-term interests in a repeated game framework. In this model there are a large number of equilibria. At the same time non-Walrasian outcomes may be generated. For some levels of unemployment exist rational strategies which deter firms to push the wages down and unemployed from under-cutting. |
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