Politiques du marché du travail et négociations par branches d'activité dans un modèle d'appariement / Labor Market Policies and Branch Negotiation Levels in a Matching Model of Unemployment

O. L'HARIDON, F. Malherbet

Recherches Economiques de Louvain / Louvain Economic Review

2009, vol. 75, n°2, pp.57-102

Departments: GREGHEC (CNRS)

Labor contracts' redefinition and severance's modalities are of particular importance in the European debate on the contours of labor market reform. This debate relies on the impressive literature devoted to the link between labor market institutions and economic performance. It's however striking that most of the contributions in this field has eluded one important source of divergence across European countries namely the level at which wage bargaining takes place. The motivation of this article is to consider, from a theoretical viewpoint, the very nature of the interactions between the wage bargaining's level and the labor market policies. In this perspective, we appeal to a search and matching model in the style of Pissarides (2000) in an economy made up of a number of industries. In such a framework we demonstrate that wage bargaining at the industry level leads to an inefficient resource allocation. We next show that well designed labor market policies permit to reach a first best allocation.JEL Classification ' J41, J48, J60.Keywords : labor market policies, wage negotiations, unemployment.