Wage Bargaining Model As Microfoundation Of Hysteresis Hypothesis

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Authors

NĚMEC Daniel MORAVANSKÝ Dalibor

Year of publication 2006
Type Article in Periodical
Magazine / Source Bulletin of the Czech Econometric Society
MU Faculty or unit

Faculty of Economics and Administration

Citation
Web elektronická verze
Field Economy
Keywords hysteresis; unemployment; wage bargaining model
Description This paper presents a wage bargaining model and its relation to hysteresis hypothesis in unemployment. Hysteresis in unemployment is used do denote a situation, in which the equlibrium rate is determined by the path of the actual unemployment rate. Seeming lack of micro economical foundations may be the reason why this theoretical concept is rather neglected. Very popular explanation of hypothesis effects is made through insider-outsider model. But this model may be taken as a very special case of wage bargaining. For a better plausibility of hysteresis hypothesis, one may examine whether a more general wage setting model does not offer a possibility of hysteresis effects as well. We will be able to decide whether hysteresis is the rule rather than exception. Using the macroeconomic data of the Czech Republic, parametres of this model will be estimated. Conclusions about the patterns of Czech unemployment will be made.
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