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Ritesh Jain and Srinivasan Murali
 
''Labour search with endogenous outside option''
( 2022, Vol. 42 No.2 )
 
 
We incorporate the extended version of Nash bargaining proposed by Vartiainen (2007) in a standard labour search and matching model to endogenously determine the outside option of workers along with their wages. We find that the optimal outside option of a worker under this framework is zero and this equilibrium maximizes social welfare when the economy is constrained efficient.
 
 
Keywords: Search and Matching, Bargaining theory, Endogenous disagreement
JEL: C7 - Game Theory and Bargaining Theory
J2 - Demand and Supply of Labor: General
 
Manuscript Received : Nov 30 2021 Manuscript Accepted : Jun 30 2022

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