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Efficient and Inefficient Employment Outcomes: A Study Based on Canadian Contract Data

Author

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  • L Christofides
  • A Oswald

Abstract

This 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.

Suggested Citation

  • L Christofides & A Oswald, 1991. "Efficient and Inefficient Employment Outcomes: A Study Based on Canadian Contract Data," CEP Discussion Papers dp0041, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0041
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    Citations

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    Cited by:

    1. Lionel Fontagné & Daniel Mirza, 2001. "International Trade and Rent Sharing in Developed and Developing countries," Working Papers 2001-09, CEPII research center.
    2. Card, David, 1990. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," American Economic Review, American Economic Association, vol. 80(4), pages 669-688, September.
    3. Andrews, Martyn & Harrison, Alan, 1998. "Testing for Efficient Contracts in Unionized Labour Markets," Bulletin of Economic Research, Wiley Blackwell, vol. 50(3), pages 171-200, July.
    4. Michael C. Burda & Bernd Fitzenberger & Alexander Lembcke & Thorsten Vogel, 2008. "Unionization, Stochastic Dominance, and Compression of the Wage Distribution: Evidence from Germany," SFB 649 Discussion Papers SFB649DP2008-041, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    5. Per Skedinger, 1992. "Employment determination in the Swedish wood industry : a test of the labor demand model," Finnish Economic Papers, Finnish Economic Association, vol. 5(1), pages 27-37, Spring.
    6. Michael C. Burda & Bernd Fitzenberger & Alexander Lembcke & Thorsten Vogel, 2008. "Unionization, Stochastic Dominance, and Compression of the Wage Distribution: Evidence from Germany," SFB 649 Discussion Papers SFB649DP2008-041, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    7. Olessia Y. Koltsova & Sergei N. Koltcov, 2014. "When Location Does Not Matter: Membership And Networking In Online Communities Of Software Developers," HSE Working papers WP BRP 57/SOC/2014, National Research University Higher School of Economics.
    8. Fontagne, Lionel & Mirza, Daniel, 2007. "International trade and rent sharing among developed and developing countries," Economic Modelling, Elsevier, vol. 24(3), pages 523-558, May.
    9. Jacques Bughin & Stefano Vannini, 2003. "Unions and the Welfare Impact of Foreign Direct Investment — A Wisdom Extension," LABOUR, CEIS, vol. 17(2), pages 285-298, June.

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