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http://hdl.handle.net/10419/21103
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| Title: | | Learning of General Equilibrium Effects and the Unemployment Trap  |
| Authors: | | Gersbach, Hans Schniewind, Achim |
| Issue Date: | | 2001 |
| Series/Report no.: | | IZA Discussion paper series 254 |
| Abstract: | | We examine wage bargaining when employers and labor unions do not always take all general equilibrium effects into account but learn a steady state. If agents do hardly consider general equilibrium effects, low real wages and low unemployment results. With an intermediate view, when partial equilibrium effects are taken into account, high real wages and unemployment results, which may explain the persistence of high unemployment in Europe. If all general equilibrium effects are incorporated at once, again low real wages and low unemployment results. We thus obtain a hump-shaped relationship between the extend of feedback effects incorporated by the bargaining parties and real wages or unemployment. |
| Subjects: | | Labor markets wage bargaining learning of general equilibrium effects unemployment |
| JEL: | | L13 D58 E24 J60 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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