Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in The Macroeconomics of Labor and Credit Market ImperfectionsEtienne Wasmer Philippe Weil The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent, nonprofit limited liability company (Gesellschaft mit beschränkter Haftung) supported by the Deutsche Post AG. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. The current research program deals with (1) mobility and flexibility of labor markets, (2) internationalization of labor markets and European integration, (3) the welfare state and labor markets, (4) labor markets in transition, (5) the future of work, (6) project evaluation and (7) general labor economics. D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. Labor market frictions are not the only possible factor responsible for high unemployment. Credit market imperfections, driven by microeconomic frictions and impacted upon by macroeconomic factors such as monetary policy, could also be to blame. This paper shows that labor and credit market imperfections interact in a complementary way -which may explain why European and US unemployment differ so much when labor markets have become more similar at the margin in Europe and the US.To develop this idea, we build a search model that treats credit and labor market imperfections in a symmetrical way. We introduce specificity in credit relationships, and assume that credit to potential entrepreneurs is rationed due to endogenous search frictions, in the spirit of Diamond (1990). These imperfections mirror the job search frictions that we introduce, à la MortensenPissarides (1994), in the labor market.JEL Classification: J64, G24, E51

No abstract

This article provides a model of labor market equilibrium with search and within-firm strategic bargaining. We yield explicit closed form solutions with heterogeneous labor inputs and capital. The solution exhibits overemployment. We show that higher relative bargaining power for some groups of workers may lead to overemployment relative to other groups, with such other groups being underemployed instead if they have a lower relative bargaining power. Similarly, the hold-up problem between capitalists and employees does not necessarily lead to underinvestment in physical capital.Beyond the neo-classical analysis, firms are the field of several strategic interactions between capital owners and labor, between marginal employees and incumbents, and more generally between different groups with various bargaining positions within the firm. It is usually considered that the bargaining power of workers entails an employment level that is lower than in a competitive labor market, and any increase in the bargaining power of workers raises unemployment. These results are true for a wide class of models, and notably in the now standard framework to analyze unemployment, namely search and matching models of Pissarides (2000). However, Stole and Zwiebel (1996a, 1996b) show that the above results are totally changed in the intra-firm bargaining model, where employees engage in individual wage negotiation with the firm. In fact, under the assumption that contract incompleteness does not enable either party to commit to future wages and employment decisions, they show that intra-firm bargaining yields no rent for employees and gives rise to overemployment compared to a competitive labor market. The basic idea of Stole and Zwiebel is that a firm with a diminishing marginal productivity of labor can decrease the bargained wage, which increases in the marginal productivity of labor, by raising employment. In Stole and Zwiebel's setting, firms overemploy strategically, up to the point where workers get their reservation wage. * Manuscript

a b s t r a c tIn the North of Europe, club membership is higher than in the South, but the frequency of contacts with friends, relatives and neighbors is lower. We link this fact to another one: the low geographical mobility rates in the South of Europe relative to the North.To interpret these facts, we build a model of local social capital and mobility. Investing in local ties is rational when workers do not expect to move to another region. We find that observationally close individuals may take different paths characterized by high local social capital, low mobility and high unemployment, vs. low social capital, high propensity to move and higher employment probability. Employment protection reinforces the accumulation of local social capital and thus reduces mobility.European data supports the theory: within a country and at the individual level, more social capital is associated with lower mobility.