Wage negotiations could stabilize employment and wages during economic shocks
This study looks at how different ways of negotiating wages can affect fluctuations in job markets using a unique method. By treating wage discussions like a problem of chance-based optimal control, the researchers studied how unexpected changes in productivity can impact the economy. They found that when negotiations lead to job adjustments aligned with what companies need, it helps match the ups and downs of businesses, but doesn't explain why wages stay stable. On the other hand, when job changes focus on the best outcome for both sides negotiating, it can also keep wages from quickly changing despite what's happening in the job market.