How Sticky Wages in Existing Jobs Can Affect Hiring

• 成果类型: Article
• 署名作者: Bils, Mark; Chang, Yongsung; Kim, Sun-Bin
• 署名单位: University of Rochester; Seoul National University (SNU); Yonsei University
• 刊物名称: AMERICAN ECONOMIC JOURNAL-MACROECONOMICS
• ISSN/ISSBN: 1945-7707
• DOI: 10.1257/mac.20190338
• 发表日期: 2022
• 页码: 1-37
• 关键词: unemployment fluctuations; inflation dynamics; cyclicality; search; prices

摘要

We consider a matching model of employment with flexible wages for new hires but sticky wages within matches. Unlike most models of sticky wages, we allow effort to respond if wages are too high or too low. In the Mortensen-Pissarides model, employment is not affected by wage stickiness in existing matches. But it is in our model. If wages of matched workers are stuck too high, firms require more effort, lowering the value of additional labor and reducing hiring. We find that effort's response can greatly increase wage inertia.