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Union Wage Policy: The Importance of Labour Mobility and the Degree of Centralization

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  • Hoel, Michael
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    Abstract

    With endogenous product prices, nationwide wage-setting gives lower unemployment than decentralized wage-setting. However, intermediate-level wage-setting may give more unemployment than both completely decentralized and completely centralized wage-setting. The main part of the paper considers a dynamic model, which includes flows of workers between firms and in and out of unemployment. With less than full centralization, the wages chosen by unions are lower the higher is the degree of labor mobility. Wages are also lower the higher is the degree of centralization, unless labor mobility is very high. Copyright 1991 by The London School of Economics and Political Science.

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    Bibliographic Info

    Article provided by London School of Economics and Political Science in its journal Economica.

    Volume (Year): 58 (1991)
    Issue (Month): 230 (May)
    Pages: 139-53

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    Handle: RePEc:bla:econom:v:58:y:1991:i:230:p:139-53

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    Cited by:
    1. Corneo, Giacomo, 1995. "National wage bargaining in an internationally integrated product market," European Journal of Political Economy, Elsevier, vol. 11(3), pages 503-520, September.
    2. Erling Steigum Jr., . "Fiscal Deficits, Asset Prices and Intergenerational Distribution in an Open Unionized Economy," EPRU Working Paper Series 97-19, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    3. Sven Wehke, 2007. "Union Wages, Hours of Work and the Effectiveness of Partial Coordination Agreements," FEMM Working Papers 07019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
    4. Karl Ove Moene & Michael Wallerstein, 1993. "The Economic Performance of Different Bargaining Institutions: A Survey of the Theoretical Literature," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 19(4), pages 423-450.
    5. Cnossen,Sijbren, 2002. "Tax policy in the european union, A review of issues and options," Research Memorandum 023, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    6. Brunello, G, 1996. "Does Centralised Bargaining Reduce Individual Effort?," ISER Discussion Paper 0426, Institute of Social and Economic Research, Osaka University.
    7. Erling Steigum, 2001. "Trade Unions and the Burden of the Public Debt," CESifo Working Paper Series 587, CESifo Group Munich.
    8. Nicole Guertzgen, 2009. "Firm Heterogeneity and Wages under Different Bargaining Regimes: Does a Centralised Union Care for Low-Productivity Firms?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 229(2-3), pages 239-253, June.
    9. Sijbren Cnossen, 2002. "Tax Policy in the European Union: A Review of Issues and Options," CESifo Working Paper Series 758, CESifo Group Munich.
    10. Michael Mesch, 1993. "Zentralisierung der Lohnsetzung, Reallöhne und Beschäftigung. Kommentar zu K. O. Moene und M. Wallerstein," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 19(4), pages 451-460.
    11. Beissinger, Thomas & Egger, Hartmut, 2001. "Dynamic Wage Bargaining if Benefits are Tied to Individual Wages," IZA Discussion Papers 389, Institute for the Study of Labor (IZA).
    12. Lorenzo Forni, 2004. "Centralization of wage bargaining and the unemployment rate: revisiting the hump-shape hypothesis," Temi di discussione (Economic working papers) 492, Bank of Italy, Economic Research and International Relations Area.
    13. Dittrich, Marcus, 2006. "Welfare Effects of Union Bargaining Centralisation in a Two-Sector Economy," MPRA Paper 11, University Library of Munich, Germany, revised Sep 2006.
    14. Blomgren-Hansen, Niels, 2012. "Optimum organization of the labor market in a small open economy," Labour Economics, Elsevier, vol. 19(2), pages 222-231.
    15. Bill Yang, 1995. "Unionized oligopoly, labor-management cooperation, and international competitiveness," Journal of Economics, Springer, vol. 62(1), pages 33-53, February.

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