This paper studies a labor market with directed search, where multi-worker firms follow a firm wage policy: They pay … equally productive workers the same. The policy reduces wages, due to the influence of firms’ existing workers on their wage … applications, I first show that firm wages dampen wage variation over the business cycle, amplifying that in unemployment, with …

, the government faces recruitment problems. The optimal steady-state wage premium depends mainly on the labour market … the optimal policy can increase the volatility of unemployment significantly. Public sector wage and employment shocks … have mixed effects on unemployment. A wage shock raises the unemployment rate, while a reduction in the separations lowers …

, the government faces recruitment problems. The optimal steady-state wage premium depends mainly on the labour market … the optimal policy can increase the volatility of unemployment significantly. Public sector wage and employment shocks … have mixed effects on unemployment. A wage shock raises the unemployment rate, while a reduction in the separations lowers …

can commit to wage contracts but cannot commit not to replace incumbent workers. Workers are risk averse, so that there …

of reporting error and cover the entire population of workers, we find a substantial degree of downward nominal wage … flexibility in Ireland in the pre-crisis period. Furthermore, we observe a significant change in wage dynamics since the crisis … began. It was only after the peak crisis period that pay freezes became a feature of the Irish wage change distribution. …

of the Spanish labor market such as binding minimum wages and downward wage rigidity caused by collective bargaining …

vs. sticky wages, interactions at the firm level between price and wage-setting, alternative forms of hiring frictions …, search on-the-job and endogenous job separation. Models with wage stickiness and right-to-manage bargaining or with firm …

unemployment across a sample of OECD countries. Using an incomplete markets variant of the fair wage real business cycle model …

share is counterfactual. However, there is substantial scope for any type of wage rigidity and financing constraints to …

regard, the authors assume two types of firms which offer different wage levels, thereby incentivizing low-paid agents to … search on-the-job. Differently from the literature, the main source of wage dispersion is the assumption of different …