The Econometric SocietyEdited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262
Econometrica: Mar, 2006, Volume 74, Issue 2
https://doi.org/10.1111/j.1468-0262.2006.00665.x
p. 323-364
Pierre Cahuc, Fabien Postel‐Vinay, Jean‐Marc Robin
Most applications of Nash bargaining over wages ignore between‐employer competition for labor services and attribute all of the workers' rent to their bargaining power. In this paper, we write and estimate an equilibrium model with strategic wage bargaining and on‐the‐job search and use it to take another look at the determinants of wages in France. There are three essential determinants of wages in our model: productivity, competition between employers resulting from on‐the‐job search, and the workers' bargaining power. We find that between‐firm competition matters a lot in the determination of wages, because it is quantitatively more important than wage bargaining à la Nash in raising wages above the workers' “reservation wages,” defined as out‐of‐work income. In particular, we detect no significant bargaining power for intermediate‐ and low‐skilled workers, and a modestly positive bargaining power for high‐skilled workers.
In this Appendix we consider the existence of a wage floor, Wmin, such that no firm can make a wage offer of less than Wmin at any stage of the bargaining process. For simplicity, we shall work under the assumption that workers are homogeneous conditional on their observed attributes, i.e. we shall assume away any dispersion in the workers? ε?s (and consequently drop the dependence on ε of all functions in the analysis to come). We otherwise take up the concepts and notation of the main text.
In this Appendix we consider the existence of a wage floor, Wmin, such that no firm can make a wage offer of less than Wmin at any stage of the bargaining process. For simplicity, we shall work under the assumption that workers are homogeneous conditional on their observed attributes, i.e. we shall assume away any dispersion in the workers? ε?s (and consequently drop the dependence on ε of all functions in the analysis to come). We otherwise take up the concepts and notation of the main text.
March 5, 2024
The terms of the Editors of the Econometric Society's three journals end June 30, 2025. We are pleased to announce the incoming Editors and to thank the outgoing Editors for their excellent and continuing service.
Econometrica: Since 2019, Guido Imbens has served as the 14th Editor of Econometrica. On July 1, 2025, Marina Halac will become the Editor.
Quantitative Economics: Stéphane Bonhomme has been the Editor of Quantitative Economics since 2021. His successor will be Bernard Salanié.
Theoretical Economics: The Editor of Theoretical Economics since 2021 has been Simon Board. Taking over for him in July 2025 will be Federico Echenique.
Guido, Stéphane, and Simon have been outstanding Editors. We are grateful to them for the work they have done and will continue to do, and we look forward to further congratulating them next year. We believe Marina, Bernard, and Federico will be outstanding successors and we thank them in advance for their service.
Finally, we are grateful to Larry Samuelson for chairing all three search committees, and we thank the search committee members for their hard and fruitful work:
Econometrica: Christian Dustmann, Lars Hansen, Alessandro Lizzeri, George Mailath, Ariel Pakes, Helene Rey, and Elie Tamer.
QE: Kate Ho, Michael Keane, Felix Kubler, Whitney Newey, and Frank Schorfheide.
TE: Jeff Ely, Johannes Horner, Gilat Levy, Meg Meyer, and Ran Spiegler.
