Document Type

Working Paper

Abstract

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.

Publication Date

1-4-2020

Publisher

Indian Institute of Management Bangalore

Relation

IIMB Working Paper-620

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