TY  - JOUR
AU  - Gertler,Mark
AU  - Trigari,Antonella
TI  - Unemployment Fluctuations With Staggered Nash Wage Bargaining
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12498
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12498
L1  - http://www.nber.org/papers/w12498.pdf
N1  - Author contact info:
Mark Gertler
Department of Economics
New York University
269 Mercer Street, 7th Floor
New York, NY 10003
Tel: 212/998-8931
Fax: 212/995-4186
E-Mail: mark.gertler@nyu.edu

Antonella Trigari
IGIER Università Bocconi
Via Roentgen 1
20136 Milano
Italy
Tel: +39 02 58363040
Fax: +39 02 58363302
E-Mail: antonella.trigari@unibocconi.it
AB  - A number of authors have recently emphasized that the conventional model of unemployment dynamics due to Mortensen and Pissarides has difficulty accounting for the relatively volatile behavior of labor market activity over the business cycle. We address this issue by modifying the MP framework to allow for staggered multiperiod wage contracting. What emerges is a tractable relation for wage dynamics that is a natural generalization of the period-by-period Nash bargaining outcome in the conventional formulation. An interesting side-product is the emergence of spillover effects of average wages on the bargaining process. We then show that a reasonable calibration of the model can account well for the cyclical behavior of wages and labor market activity observed in the data. The spillover effects turn out to be important in this respect.
ER  -