Abstract
This paper analyzes the time consistent and efficient solution for wages and employment in intertemporal insider-outsider models of bargaining with endogenous membership. When the reservation wage is made endogenous in a general equilibrium context, insider-outsider models can generate a fundamental asymmetry in the adjustment of employment to the steady state. While upturns are gradual, severe downturns are characterized by a sharp drop in employment, obtained by laying off workers. Further reductions in employment are achieved solely through quits. Copyright 1992 by Royal Economic Society.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
