Marriage and employment participation with wage bargaining in search equilibrium |
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Authors: | Roberto Bonilla Alberto Trejos |
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Institution: | 1. Newcastle University, Newcastle upon Tyne, UK;2. INCAE, Alajuela, Costa Rica |
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Abstract: | We build an equilibrium search model where married couples make joint decisions on home production and labour market participation and analyse the implications of our results for a frictional marriage market. A worker's bargaining position reflects their productivity, and the productivity and employment status of their spouse. People sometimes accept transitory jobs only to raise the spouse's long-term wages. Firms sometimes reduce turnover by unilaterally increasing a worker's wage, ensuring that the spouse stays at home. |
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Keywords: | labour market participation linked search markets marriage market wage formation |
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