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Local versus Central Wage Bargaining with Endogenous Investments

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  • Hoel, Michael
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    Abstract

    Investment behavior may depend on whether wage bargaining takes place centrally or locally (at the firm level). The outcome of the wage bargain will in turn depend on previous investments. Ignoring other differences between the two bargaining regimes, endogenous investments imply that wages are lower and profits higher under local wage bargaining than under central bargaining. This does not necessarily imply that employment is highest under local bargaining, since investments may differ in the two cases. With a Nash bargaining solution, however, reasonable assumptions imply that employment is highest under local wage bargaining. Copyright 1990 by The editors of the Scandinavian Journal of Economics.

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

    Volume (Year): 92 (1990)
    Issue (Month): 3 ()
    Pages: 453-69

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    Handle: RePEc:bla:scandj:v:92:y:1990:i:3:p:453-69

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    Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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    Cited by:
    1. 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.
    2. Frank Scharr, 2005. "Tarifbindung, Rententeilung und Konzessionsverträge als Einflussgrößen der Lohnhöhe in Unternehmen : eine Untersuchung mit Mikrodaten für thüringische Firmen," ifo Dresden Studien, Ifo Institute for Economic Research at the University of Munich, number 39.
    3. Pohl, Hartmut, 1998. "Die Rolle von Arbeitsmärkten bei der Qualitätsauswahl in vertikal differenzierten Märkten," Discussion Papers, Series 1 292, University of Konstanz, Department of Economics.
    4. Brunello, Giorgio, 1998. "Does centralised bargaining reduce individual effort?," European Journal of Political Economy, Elsevier, vol. 14(2), pages 381-406, May.
    5. 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.
    6. Claus Hansen, 1999. "Long-run impact of increased wage pressure," Journal of Economics, Springer, vol. 69(2), pages 141-157, June.
    7. Paul Frijters, 1997. "Capital scarcities as a reason for high unemployment in the European Union," Macroeconomics 9706002, EconWPA.
    8. Kornelius Kraft, 2006. "Wage versus efficient bargaining in oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 27(7), pages 595-604.
    9. Jean-François Fagnart & Marc Germain, 1997. "Investment and technological choice in a right-to-manage model," Journal of Economics, Springer, vol. 66(3), pages 223-247, October.
    10. Julia Müller & Thorsten Upmann, 2013. "Centralised Labour Market Negotiations," CESifo Working Paper Series 4470, CESifo Group Munich.

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