Wage Bargaining with On-the-Job Search: A Structural Econometric Model

Joint with: Pierre Cahuc and Fabien Postel-Vinay

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. In particular, we detect no significant bargaining power for unskilled workers. However, inter-industry differentials are mainly due to

differences in productivity, and bargaining power, in the case of skilled

For more information, contact Jere Behrman.