1. Employment, Hours and the Welfare Effects of Intra-Firm Bargaining
- Author
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Vivien Lewis, Maarten Dossche, Céline Poilly, European Central Bank, ECB, Catholic University of Leuven - Katholieke Universiteit Leuven (KU Leuven), Groupement de Recherche en Économie Quantitative d'Aix-Marseille (GREQAM), École des hautes études en sciences sociales (EHESS)-Aix Marseille Université (AMU)-École Centrale de Marseille (ECM)-Centre National de la Recherche Scientifique (CNRS), Department of Economics, KU Leuven, École Centrale de Marseille (ECM)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS)-Aix Marseille Université (AMU), European Central Bank (ECB), Research Centre, Deutsche Bundesbank, Deutsche Bundesbank, and Aix-Marseille Sciences Economiques (AMSE)
- Subjects
Employment ,Economics and Econometrics ,Labour economics ,Returns to scale ,Steady state (electronics) ,media_common.quotation_subject ,optimal monetary policy ,Wage ,JEL: D - Microeconomics/D.D6 - Welfare Economics/D.D6.D62 - Externalities ,0502 economics and business ,Marginal product ,Economics ,intra-firm bargaining ,Intrafirm bargaining ,050207 economics ,JEL: E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook/E.E6.E64 - Incomes Policy • Price Policy ,health care economics and organizations ,JEL: E - Macroeconomics and Monetary Economics/E.E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy/E.E2.E24 - Employment • Unemployment • Wages • Intergenerational Income Distribution • Aggregate Human Capital • Aggregate Labor Productivity ,JEL: E - Macroeconomics and Monetary Economics/E.E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook/E.E6.E61 - Policy Objectives • Policy Designs and Consistency • Policy Coordination ,050205 econometrics ,media_common ,Hours ,JEL: H - Public Economics/H.H2 - Taxation, Subsidies, and Revenue/H.H2.H21 - Efficiency • Optimal Taxation ,05 social sciences ,Overhiring ,distortions ,[SHS.ECO]Humanities and Social Sciences/Economics and Finance ,8. Economic growth ,Welfare ,Finance ,Externality - Abstract
Ce Working Paper fait l'objet d'une publication in Journal of Monetary Economics, Elsevier 〈https://www.sciencedirect.com/science/article/abs/pii/S0304393218305294〉〈hal-01995026〉; Intra-firm bargaining between a multiple-worker firm and an individual employee leads to overhiring. Taking advantage of the decreasing returns to scale in employment, the firm can reduce the marginal product by hiring an additional worker, thereby reducing the bargaining wage paid to all existing employees. We show that this externality is amplified when firms can adjust hours per worker as well as employment. Hours are too low at the steady state. This misallocation of labor leads to sizeable welfare losses. Our finding is important for economies in which hours adjustment play an important role as it does in many Euro Area countries.
- Published
- 2016
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