Efficient and Inefficient Employment Outcomes: A Study Based on Canadian Contract Data
AbstractThis paper estimates employment equations based on the traditional labour demand model and modern efficient bargain theory using data drawn from wage contracts signed in the Canadian private unionised sector between 1978 and 1984. Contrary to the labour demand model predictions, the alternative wage rate is consistently significant and has the negative coefficient predicted by efficient bargain theory. Though a credible labour demand model can sometimes be estimated, the results are sensitive to the assumed market structure and to the introduction of alternative wage and unemployment insurance variables. Non-nested tests favour bargain specifications.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0041.
Date of creation: Jul 1991
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