Code for: Firm Wages in a Frictional Labor Market

Principal Investigator(s):  View help for Principal Investigator(s) Leena Rudanko, Federal Reserve Bank of Philadelphia

Version:  View help for Version V1

Name File Type Size Last Modified
  dynareinstallationfiles 12/22/2021 12:23:PM
  programs 12/22/2021 02:55:PM
  simulationresults 12/22/2021 12:41:PM
README.pdf application/pdf 233.1 KB 11/21/2022 03:42:PM

Project Citation: 

Rudanko, Leena. Code for: Firm Wages in a Frictional Labor Market . Nashville, TN: American Economic Association [publisher], 2022. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-12-09. https://doi.org/10.3886/E158161V1

Project Description

Summary:  View help for Summary This paper studies wage setting in a directed search model of multi-worker firms facing within-firm equity constraints on wages. The constraints reduce wages, as firms exploit their monopsony power over their existing workers, rendering wages less responsive to productivity in doing so. They also give rise to a time-inconsistency in the dynamic firm problem, as firms face a less elastic labor supply in the short run than the long run, making commitment to future wages valuable. Constrained firms find it profitable to fix wages, and doing so is good for worker welfare and resource allocation in equilibrium.


Scope of Project

Subject Terms:  View help for Subject Terms wages and salaries; business cycles; unemployment; employment
JEL Classification:  View help for JEL Classification
      E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
      E32 Business Fluctuations; Cycles
      J41 Labor Contracts
      J64 Unemployment: Models, Duration, Incidence, and Job Search
Geographic Coverage:  View help for Geographic Coverage Not applicable
Time Period(s):  View help for Time Period(s) 0000 – 0000 (Not applicable)
Collection Date(s):  View help for Collection Date(s) 0000 – 0000 (Not applicable)
Universe:  View help for Universe Not applicable
Data Type(s):  View help for Data Type(s) program source code
Collection Notes:  View help for Collection Notes Replication materials for journal publication that include solely the computer programs producing the numerical results in article (no external data involved).

Methodology

Data Source:  View help for Data Source Not applicable
Unit(s) of Observation:  View help for Unit(s) of Observation Not applicable

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Published Versions

V1 [2022-12-09]

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