A Cointegration Model for Search Equilibrium Wage Formation

L. Broersma, Frank A.G. den Butter, Udo Kock

Research output: Working paperProfessional

Abstract

In flow models of the labor market, wages are determined by negotiations between workers and employers on the surplus value of a realized match. From this perspective our study presents an econometric analysis of the influence of labor market flows on wage formation as alternative to the traditional specification of wage equations where unemployment represents the Phillips-curve or wage curve-effects. We estimate a dynamic wage equation for the Netherlands using a cointegration approach. We find that labor flows, and notably flows from outside the labor market, are important determinants for both short run and long run wage setting
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2003

Publication series

NameDiscussion paper TI
No.03-088/3

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Broersma, L., den Butter, F. A. G., & Kock, U. (2003). A Cointegration Model for Search Equilibrium Wage Formation. (Discussion paper TI; No. 03-088/3). Amsterdam: Tinbergen Instituut.