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I'm almost certain that under a frictionless competitive model you'd be able to derive some kind of equivalence result, similar to equivalence of tax incidence in competitive markets.
Aren't labor protections asymmetric? What would be the equivalent on the other side?
I just woke up, so maybe my brain is missing something obvious.
I think I meant that absent artificial frictions like labor protections, the impacts would be symmetric.
But even with labor protections, I imagine that some kind of equivalence would still result under rational expectations models. I don't think it's obvious, it's more like my intuition tells me that only one allocation of surplus would be admissible in equilibrium
I think I see what you're getting at. Do you think differences in risk aversion between firms and workers would actually make the incidence matter?
yes I can see that too. if utility is not linearly transferable then my guess is you'd lose equivalence
I also think it's overblown. Sticky wages were a friction on the gold standard, but I haven't seen evidence that they were actually a huge problem.
One issue with employers assuming that risk now is that it's more difficult to fire employees, so it might lead to more reluctance in hiring. I've heard that's a fairly large friction in European labor markets.