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The political economy of collective bargaining

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  • Palokangas, Tapio

Abstract

We construct a political equilibrium in which employers and labour unions bargain over labour contracts, wage-earners and profit-earners lobby the government for taxation and labour market regulation, and labour market legislation must be accepted by the majority of voters. We show that the voters rule out profit sharing, because otherwise the government would capture all the gain. Furthermore, if it is much easier to tax wages than profits, then the government protects union power by regulation in the labour market. In such a case, the political equilibrium is characterized by strong union power and right-to-manage bargaining, which causes involuntary unemployment.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 10 (2003)
Issue (Month): 2 (April)
Pages: 253-264

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Handle: RePEc:eee:labeco:v:10:y:2003:i:2:p:253-264

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References

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  1. Gene M. Grossman & Elhanan Helpman, 1992. "Protection For Sale," NBER Working Papers 4149, National Bureau of Economic Research, Inc.
  2. Dixit, Avinash & Grossman, Gene M & Helpman, Elhanan, 1997. "Common Agency and Coordination: General Theory and Application to Government Policy Making," Journal of Political Economy, University of Chicago Press, vol. 105(4), pages 752-69, August.
  3. Blanchard, Olivier J & Giavazzi, Francesco, 2001. "Macroeconomic Effects of Regulation and Deregulation in Goods and Labour Markets," CEPR Discussion Papers 2713, C.E.P.R. Discussion Papers.
  4. Palokangas,Tapio, 2000. "Labour Unions, Public Policy and Economic Growth," Cambridge Books, Cambridge University Press, number 9780521663236, October.
  5. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
  6. Palokangas, Tapio, 2003. "The political economy of collective bargaining," Labour Economics, Elsevier, vol. 10(2), pages 253-264, April.
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Citations

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Cited by:
  1. Tapio Palokangas, 2002. "The Political Economy of Collective Bargaining," CESifo Working Paper Series 719, CESifo Group Munich.
  2. Tapio Palokangas, 2008. "Self-Interested Governments, Unionization, and Legal and Illegal Immigration," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 2(1), pages 007-020, March.
  3. Palokangas, Tapio K., 2014. "The Political Economy of Labor Market Regulation with R&D," IZA Discussion Papers 8147, Institute for the Study of Labor (IZA).
  4. Palokangas, Tapio K., 2003. "Foreign Direct Investment, Labour Market Regulation and Self-Interested Governments," IZA Discussion Papers 793, Institute for the Study of Labor (IZA).
  5. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  6. Tapio Palokangas, 2009. "Investment, expropriation, and unionization," Economics of Governance, Springer, vol. 10(1), pages 27-42, January.
  7. Tapio Palokangas, 2004. "Integration, Wage Bargaining, and Growth with Creative Destruction," DEGIT Conference Papers c009_015, DEGIT, Dynamics, Economic Growth, and International Trade.

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