TY  - RPRT
        AU  - Blanco, Andrés
AU  - Drenik, Andres
AU  - Moser, Christian
AU  - Zaratiegui, Emilio
        TI  - A Theory of Non-Coasean Labor Markets
        PY  - 2023/May/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 16121
        UR  - https://www.iza.org/index.php/publications/dp16121
        AB  - We develop a theory of labor markets in a monetary economy with four realistic features: search frictions, worker productivity shocks, wage rigidity, and two-sided lack of commitment. Due to the non-Coasean nature of labor contracts, inefficient job separations occur in the form of endogenous quits and layoffs that are unilaterally initiated whenever a worker's wage-to-productivity ratio moves outside an inaction region. We derive sufficient statistics for the aggregate labor market response to a monetary shock based on the distribution of workers' wage-to-productivity ratios. These statistics crucially depend on the incidence of inefficient job separations, which we show how to identify using readily available microdata on wage changes and worker flows between jobs.
        KW  - inflation
KW  - monetary policy
KW  - wage rigidity
KW  - wage inequality
KW  - unemployment
KW  - inefficient job separations
KW  - quits
KW  - layoffs
KW  - directed search
KW  - commitment
KW  - stopping times
KW  - continuous-time methods
KW  - variational inequalities
        ER  -