A Union-Oligopoly Model of Endogenous Discrimination:Should it be wage discrimination taxed or discriminated employment subsidized?
AbstractIn the context of a homogenous good industry with Cournot rivalry and technological asymmetries among firms, equally skilled workers can be grouped according to their different reservation wages. Under decentralized firm-union bargaining, we show that unions may offer to firms the option to discriminate wages across such groups of employees and, by that, to achieve cost sub-additivity in the equilibrium. We subsequently propose that to combat the emerging wage discrimination a benevolent policy maker may activate either taxation, or subsidization, policy. Interestingly, while the former policy always entails a welfare loss, a welfare gain may emerge under the latter policy, relative to the no policy-wage discrimination status quo. Thus our findings suggest that the E.U- antidiscrimination directives may prove to be effective on both egalitarian and efficiency grounds.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Crete, Department of Economics in its series Working Papers with number 0614.
Length: 26 pages
Date of creation:
Date of revision:
Unions; Oligopoly; Discriminatory Wage Contracts; Antidiscrimination Policy;
Find related papers by JEL classification:
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September.
- Swinton, David H, 1977. "A Labor Force Competition Theory of Discrimination in the Labor Market," American Economic Review, American Economic Association, vol. 67(1), pages 400-404, February.
- Hinks, T. & Watson, D., 1999. "A Multinominal Logit No-Discrimatory Approach to Estimating Racial Wage and Occupational Discrimation," Papers 67, Middlesex University - School of Economics.
- Emmanuel Petrakis & Minas Vlassis, .
"Endogenous Wage-Bargaining Institutions in Oligopolistic Sectors,"
0105, University of Crete, Department of Economics, revised 00 Dec 2001.
- Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer, vol. 24(1), pages 55-73, 07.
- Barbara R. Bergmann & William R. Krause, 1972. "Evaluating and forecasting progress in racial integration of employment," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 25(3), pages 399-409, April.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kostis Pigounakis).
If references are entirely missing, you can add them using this form.