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Optimum organization of the labor market in a small open economy

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  • Blomgren-Hansen, Niels
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    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.

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    Bibliographic Info

    Article provided by Elsevier in its journal Labour Economics.

    Volume (Year): 19 (2012)
    Issue (Month): 2 ()
    Pages: 222-231

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    Handle: RePEc:eee:labeco:v:19:y:2012:i:2:p:222-231

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    Web page: http://www.elsevier.com/locate/labeco

    Related research

    Keywords: Labor market organization; Wage bargaining; Craft unions; Industrial cartels;

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    References

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    1. Lommerud, Kjell Erik & Sørgard, Lars & Straume, Odd Rune, 2003. "National versus International Mergers in Unionised Oligopoly," CEPR Discussion Papers 4040, C.E.P.R. Discussion Papers.
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    9. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
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    12. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Wiley Blackwell, vol. 56(1), pages 59-76, January.
    13. Jonas Björnerstedt & Andreas Westermark, 2009. "The inefficiency of price quantity bargaining," Economic Theory, Springer, vol. 40(2), pages 301-332, August.
    14. Wallace Hendricks & Larry M. Kahn, 1982. "The determinants of bargaining structure in U.S. manufacturing industries," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(2), pages 181-195, January.
    15. Moene, Karl O, 1988. "Unions' Threats and Wage Determination," Economic Journal, Royal Economic Society, vol. 98(391), pages 471-83, June.
    16. Hoel, Michael, 1991. "Union Wage Policy: The Importance of Labour Mobility and the Degree of Centralization," Economica, London School of Economics and Political Science, vol. 58(230), pages 139-53, May.
    17. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
    18. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
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