Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/179410
Authors: 
Vasilev, Aleksandar
Year of Publication: 
2017
Series/Report no.: 
EERI Research Paper Series 09/2017
Abstract: 
In this paper we introduce reciprocity in labor relations and government sector to in- vestigate how well the real wage rigidity that results out of that arrangement explains business cycle fluctuations in Bulgaria. The reciprocity mechanism described in this paper follows Danthine and Kurmann (2010) and is generally consistent with micro- studies, e.g. Lozev, Vladova, and Paskaleva (2011) and Paskaleva (2016). Rent-sharing considerations, and worker's own past wages turn out to be the most important as- pects of how labor contracting happens. In contrast, aggregate economic conditions, as captured by the employment rate, are not found to be quantitatively important for wage dynamics. Overall, the model with reciprocity and fiscal policy performs well vis-a-vis data, especially along the labor market dimension.
Subjects: 
General equilibrium
reciprocity
gift exchange
efficiency wages
unemployment
fiscal policy
Bulgaria
JEL: 
E24
E32
J41
Document Type: 
Working Paper

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