Vetter, Henrik (1991) Wage determination with asymmetric information. PhD thesis, University of Warwick.

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Abstract

This thesis contains 5 independent chapters together with an Introduction and a General Conclusion. All five chapters consider the problem of wage determination in an economy characterized by asymmetric information. The solution which is implemented, for example a pair consisting of the wage and the level of employment, is restricted to elicit all possible relevant information. This forces some additional constraints upon the optimization problem of the agents.

Chapters 2 and 3 demonstrate that since the firm does not voluntarily share its information with other agents, the level of employment is not efficient. In both a separating and a pooling equilibrium, underemployment is the case. Note here that the equilibrium obtained changes qualitatively from Chapter 2 to Chapter 3. We return to this in the General Conclusion.

Chapter 4 elaborates upon Chapter 2. It is shown that in an otherwise competitive economy, employment and investment are lowered since they are used as signalling devices, compared to the case of symmetric and perfect information. In a model characterized by monopoly, this conclusion is no longer true. The effect upon investment is no longer unambiguous. We also return to this in the General Conclusion.

Chapters 5 and 6 consider economic policy in the case of a separating, respectively, pooling equilibrium. It is shown that in the case of a separating equilibrium, taxation can improve upon the situation. For a pooling equilibrium we show the existence of multipliers.

General for these models is that the introduction of asymmetric information certainly does have an effect, but also that the results are possibly non-robust to assumptions with respect to the market form.

Item Type:	Thesis (PhD)
Subjects:	H Social Sciences > HB Economic Theory
Library of Congress Subject Headings (LCSH):	Wages -- Econometric models, Macroeconomics -- Mathematical models, Microeconomics -- Mathematical models
Official Date:	January 1991
Dates:	Date Event January 1991 Submitted
Institution:	University of Warwick
Theses Department:	Department of Economics
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Fraser, Clive
Sponsors:	British Council
Format of File:	pdf
Extent:	iv, 245 leaves : illustrations
Language:	eng

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