We model the design of labor market institutions in an economy characterized by moral hazard and irreversible investment. In this setting, the environment setting affects the bargaining power of labor. At the optimum the allocation of bargaining power balances the aforementioned frictions. We...

This note demonstrates that it is still possible to identify the economy's technology from national income accounting data when wages are set through a bargaining process rather than the usual competitive mechanism. Applying the method to US data, we obtain that the output elasticity with...