Charpe, Matthieu and Kühn, Stefan (2012): Bargaining, Aggregate Demand and Employment.
Download (194kB) | Preview
This paper depicts the negative impact of a falling labour share caused by reduced bargaining power of workers on aggregate demand and employment. Contrary to standard New Keynesian models, the presence of consumers not participating in financial markets (rule of thumb consumers) causes an immediate negative response of output and employment, which is amplified when the economy faces a lower bound on the nominal interest rate. Additionally, the paper shows that by supporting consumption demand, minimum wages might enhance output and employment.
|Item Type:||MPRA Paper|
|Original Title:||Bargaining, Aggregate Demand and Employment|
|Keywords:||Labour share, search and matching, aggregate demand, household heterogeneity|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E24 - Employment ; Unemployment ; Wages ; Intergenerational Income Distribution ; Aggregate Human Capital ; Aggregate Labor Productivity
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth
|Depositing User:||Stefan Kühn|
|Date Deposited:||20. Jul 2012 10:58|
|Last Modified:||15. Feb 2013 21:20|
Acemoglu, Daron (2003). Cross-country inequality trends. Journal of economic litterature 113, 121–149.
Arpaia, Alfonso, Esther P´erez, and Karl Pichelmann (2009). Understanding labour income share dynamics in europe. European Economy Economic Papers (379).
Askenazy, Philippe (2003). Partage de la valeur ajout´e et rentabilit´e du capital en france et aux etats-unis: une r´e´evaluation. Economie et statistique 363(1), 167–179.
Atkinson, Anthony, Thomas Piketty, and Emmanuel Saez (2011). Top incomes in the long run of history. Journal of economic litterature 49, 3–71.
Bentolila, Samuel and Gilles Saint-Paul (2003). Explaining movements in the labor share. Contributions to Macroeconomics 3.
Berthold, Norbert, Rainer Fehn, and Eric Thode (2002). Falling labor share and rising unemployment: Long-run consequences of institutional shocks? German Economic Review 3 (4), 431–459.
Blanchard, Olivier (1997). The medium run. Brookings Papers on Economic Activity 2, 89–158.
Blanchard, Olivier and Francesco Giavazzi (2003). Macroeconomic effects of regulation and deregulation in goods and labor markets. The Quarterly Journal of Economics 118(3), 879–907.
Bosc´a, Jos´e Emilio, Javier Ferri, and Rafael Dom´enech (2011). Search, nash bargaining and rule of thumb consumers. European Economic Review 55(7), 927–942.
Choi, Sekyu and Jos´e-Victor Rios-Rull (2009). Understanding the dynamics of labor share: The role of noncompetitive factor prices. Annals of Economics and Statistics 95/96, 251–278.
Christiano, Lawrence, Martin Eichenbaum, and Sergio Rebelo (2009). When is the government spending multiplier large? NBER Working Paper 15394, 1–68.
Christiano, Lawrence, Mathias Trabandt, and Karl Walentin (2011). Handbook of monetary economics, Chapter DSGE Models for monetary policy analysis, pp. 285–367.
Cogan, John, Tobias Cwik, John B. Taylor, and Volker Wieland (2010). New keynesian versus old keynesian government spending multipliers. Journal of Economic Dynamics and Control 34(3), 281–295.
Gal´ı, Jordi, J. David L´opez-Salido and Javier Vall´es (2007, March). Understanding the effects of government spending on consumption. Journal of the European Economic Association 5 (1), 227–270.
Gertler, Mark and Antonella Trigari (2009). Unemployment fluctuations with staggered nash wage bargaining. Journal of Political Economy 117 (1), 38–86.
Hall, Robert E. (2005). Employment fluctuations with equilibrium wage stickiness. American Economic Review 95 (1), 50–65.
Holden, Tom (2011). Products, patents and productivity persistence: A DSGE model of endogenous growth. Dynare Working Paper (4).
Kaldor, Nicholas (1955). Alternative theories of distribution. The Review Of Economic Studies 23 (2), 83–100. Kumhof, Michael and Romain Ranciere (2010). Inequality, leverage and crises. IMF Working Papers 10/268.
Lemieux, Thomas (2006). Increasing residual wage inequality: Composition effects, noisy data, or rising demand for skill? American Economic Review 96(3), 461–498. Mankiw, N. Gregory (2000). The savers-spenders theory of fiscal policy. American Economic Review 90(2), 120–125.
Picketty, Thomas (2001). Les hauts revenus en France au XXe siecle. Paris, Grasset. Piketty, Thomas and Emmanuel Saez (2003). Income inequality in the united states, 1913-1998. The Quarterly Journal of Economics 118, 1–39.
Ravenna, Federico and Carl E. Walsh (2008). Vacancies, unemployment, and the phillips curve. European Economic Review 52 (8), 1494–1521.
Sala, Luca, Uil Soderstrom, and Antonella Trigari (2008). Monetary policy under uncertainty in an estimated model with labor market frictions. Journal of Monetary Eco- nomics 55 (5),, pp. 983–1006.
Shimer, Robert (2005). The cyclical behavior of equilibrium unemployment and vacancies. American Economic Review 95(1), 25–49.
Solow, Robert (1958). A skeptical note on the constancy of relative shares. The American Economic Review 48(4), 618–631.
Young, Andrew T. (2010). One of the things we know that ain’t so: Is us labor’s share relatively stable? Journal of Macroeconomics 32(1).