SEMINAR SERIES
Applied Macroeconomics Seminar
Yongsung Chang（Professor, Seoul National University）
- Date&Time:
- 2019.11.1 (Fri) 16:30‐18:00
- Venue:
- Refresh Room on 8F, Faculty of Law and Faculty of Economics East Bldg., Yoshida Campus, Kyoto University
- Language:
- English
- Contact:
- Shinichi Nishiyama
Title:
"How Sticky Wages of Existing Jobs Can Affect Hiring" (with Mark Bils and Sun-Bin Kim)
Abstract：
We consider a matching model of employment with flexible wages for new hires, but sticky wages within matches. Unlike most models of sticky wages, we allow effort to respond if wages are too high or too low. In the Mortensen-Pissarides model, employment is not affected by wage stickiness in existing matches. But it is in our model. If wages of matched workers are stuck too high, firms require more effort, lowering the value of additional labor and reducing hiring. We find that effort’s response can greatly increase wage inertia.