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Optimum organization of the labor market in a small open economy

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  • Blomgren-Hansen, Niels

Abstract

In Denmark labor has been organized in independent but cooperating craft unions for more than a century. Within an extremely simple model of a small open economy facing imperfect competition, we analyze four different ways of organizing the labor market and show that the Danish model (partial centralization of the wage setting process) may be accounted for as the outcome of a two-stage Nash bargaining game, being robust in relation to changes in market conditions, and likely close to optimum from the point of view of society as a whole.

Suggested Citation

  • Blomgren-Hansen, Niels, 2012. "Optimum organization of the labor market in a small open economy," Labour Economics, Elsevier, vol. 19(2), pages 222-231.
    • Handle: RePEc:eee:labeco:v:19:y:2012:i:2:p:222-231
    DOI: 10.1016/j.labeco.2011.10.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Labor market organization; Wage bargaining; Craft unions; Industrial cartels;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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