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| Ritesh Jain and Srinivasan Murali |
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| ''Labour search with endogenous outside option'' |
| ( 2022, Vol. 42 No.2 ) |
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| 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. |
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| Keywords: Search and Matching, Bargaining theory, Endogenous disagreement |
JEL: C7 - Game Theory and Bargaining Theory
J2 - Demand and Supply of Labor: General |
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| Manuscript Received : Nov 30 2021 | | Manuscript Accepted : Jun 30 2022 |
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