A Reverse Holdup Problem
AbstractIn a model of horizontal matching on the labor market, we show that increasing the bargainingpower of workers may increase the incentive of some employers to switch to newproduction activities. In particular, this could lead to (i) higher wages, (ii) more jobs, (iii)better jobs and (iv) higher profits. Paradoxically, the median voter may object to the economicadjustments because search costs could cut the surplus for workers of the majority type, evenwhen it creates jobs for the other ones and increases aggregate surplus.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2013-14.
Length: 18 p.
Date of creation: Mar 2013
Date of revision:
Publication status: Published by:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-03-16 (All new papers)
- NEP-LAB-2013-03-16 (Labour Economics)
- NEP-MIC-2013-03-16 (Microeconomics)
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