Counter Intuitive Results in a Simple Model of Wage Negotiations
AbstractShort-term contracts and exogenous productivity growth are introduced in asimple wage bargaining model. The equilibrium utilities corresponding tomilitant union behaviour are independent of the contract length. The wagedynamics are linear if strike is credible (low wage shares) and nonlinearotherwise (high wage shares). The model can admit two steady state wageshares. The one under strike is not credible exceeds the one under strikeis credible. A wage decrease can occur if strike is credible, but neverwhen strike is not credible. In the limit as time between bargaining roundsvanishes only the first paradox survives.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 98-115/3.
Date of creation: 21 Oct 1998
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wage bargaining; wage dynamics; chaos; strike;
Other versions of this item:
- Harold Houba & Gijsbert van Lomwel, 2001. "Counter intuitive results in a simple model of wage negotiations," Economic Theory, Springer, vol. 17(1), pages 81-99.
- Lomwel, A.G.C. van & Houba, H.E.D., 1998. "Counter Intuitive Results in a Simple Model of Wage Negotiations," Discussion Paper 1998-92, Tilburg University, Center for Economic Research.
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
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