Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310335 
Year of Publication: 
2025
Publisher: 
ZBW – Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
This paper uses Nash equilibrium reversion as an optimal tool for clearing dynamic prices and wages. Various exogenous competitive rigidities determine the balanced growth path of the efficiency wage and the outcome of repeated household/firm wage bargaining decisions. A location model is used to explore the extent to which a downstream spatial cooperation agreement might affect the price equilibrium. There is also an endogenous hiring function and a knowledge base that is increasing in output as is the real wage. As the article demonstrates after accounting for real rigidities in the baseline model the effect of wage growth on household utility through staggered bargaining can be best captured by adopting a policy of point scoring on the mobility of skilled labor against the model's key rigidities. Mobility point scores which serve to encourage mobility from skilled labor within the model not only increase the knowledge base but also place upward pressure on nominal wage growth.
Subjects: 
labor
wages
mobility
signalling
game theory
competition
JEL: 
L16
D21
D31
D61
D19
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Preprint

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