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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/2992| Title: | Can insider power affect employment? |
| Keywords: | J21 J23 J31 J32 J33 ddc:330 Employment Wage determination market power insiders hiring and firing costs Lohnstruktur Insider-Outsider-Modell Arbeitsuche Anspruchslohn Marktmacht Theorie |
| Issue Date: | 16-Oct-2013 |
| Description: | Do firms reduce employment when their insiders (established, incumbent employees) claim higher wages? The conventional answer in the theoretical literature is that insider power has no influence on employment, provided that the newly hired employees (entrants) receive their reservation wages. The reason given is that an increase in insider wages gives rise to a countervailing fall in reservation wages, leaving the present value of wage costs unchanged. Our analysis contradicts this conventional answer. We show that, in the context of a stochastic model of the labor market, an increase in insider wages promotes firing in recessions, while leaving hiring in booms unchanged. Thereby insider power reduces average employment. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/2992 |
| Other Identifiers: | German economic review 1465-6485 4 2003 2 139-150 doi:10.1111/1468-0475.00076 http://hdl.handle.net/10419/2992 ppn:365307750 RePEc:zbw:ifwkie:2992 |
| Appears in Collections: | EconStor |
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